Financial Report

Last week featured a light release schedule, with the key highlights being the CPI and PPI reports. The CPI has proven to be exactly within expectations, signaling the Federal Reserve should be on track for another planned rate cut. However, this was offset by higher-than-expected PPI inflation. Despite these mixed signals, both indicators show stable trends, and overall inflation appears to be moving toward the Federal Reserve’s target. The Federal Reserve remains committed to reducing inflation until their goal is achieved.

Consumer Price Index

Consumer prices rose in November at the fastest pace in seven months. Still, the latest inflation report is probably not hot enough to sidetrack the Federal Reserve from cutting interest rates again next week. The consumer price index climbed 0.3% last month — in line with Wall Street forecasts — to match the biggest increase since April.

Producer Price Index

The less volatile core measure of the producer-price index rose a scant 0.1% last month, the government said Thursday. That was a tick below the Wall Street forecast. Prices for final demand advanced 3.0% for the 12 months ended in November.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.12% with the current rate at 5.84%
• 30-Yr FRM rates saw a decrease of -0.09% with the current rate at 6.60%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.20% for this week. Current rates at 6.32%
• 30-Yr VA rates saw an increase of 0.20% for this week. Current rates at 6.33%

Jobless Claims

Initial Claims were reported to be 242,000 compared to the expected claims of 220,000. The prior week landed at 224,000.

What’s Ahead

A slightly busier schedule just before the end of the year, with many larger reports including the last of the GDP Estimates, Retail Sales, Manufacturing PMI for the year, Personal Income & Spending, and the last Consumer Sentiment report from the University of Michigan.

With the CPI and PPI scheduled for release in the upcoming week, the previous week was lightly peppered with a small amount of impactful financial data releases. The highlight was the S&P Manufacturing PMI, which reported final numbers for the year showing better-than-expected improvements in the manufacturing sector. Unemployment data also aligned with expectations, reinforcing the likelihood of a Federal Reserve rate cut remaining on track. Lastly, the Consumer Credit Report had the expected jump just before the Holiday Season as consumers relied on credit to make holiday purchases for the end of the year.

S&P PMI Final

Input cost inflation slowed further, reaching its lowest rate in a year. Meanwhile, output prices increased at a slightly faster pace. The seasonally adjusted S&P PMI stayed below the neutral 50.0 mark, recording 49.7, which indicates only a slight decline in the sector’s health for the month. This was an improvement from October’s 48.5 reading and marked the highest level in the current five-month trend of weakening business conditions.

Unemployment Report

The economy added a seemingly solid 227,000 new jobs in November, but much of the gain was tied to temporary influences instead of resurgence in weakening U.S. labor market. The rebound in hiring followed a paltry 36,000 increase in new jobs in October, when a strike at Boeing and a pair of major hurricanes depressed employment.

Consumer Credit

Total U.S. consumer credit surged in October, rising by $19.2 billion compared to a $3.2 billion gain in the prior month, the Federal Reserve said Friday. This marked the fastest growth since July, reflecting a 4.5% annualized growth rate, up significantly from the 0.8% increase in the previous month.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.14% with the current rate at 5.96%
• 30-Yr FRM rates saw a decrease of -0.12% with the current rate at 6.69%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.10% for this week. Current rates at 6.12%
• 30-Yr VA rates saw a decrease of -0.11% for this week. Current rates at 6.13%

Jobless Claims

Initial Claims were reported to be 224,000 compared to the expected claims of 215,000. The prior week landed at 215,000.

What’s Ahead

A light week, with the largest reports being the Consumer Price Index and Price Producer Index. These have historically been the most impactful reports for inflation.

Leading off with the FOMC Minutes, the Federal Reserve has stated once again they will maintain a “gradual” approach to cutting interest rates, which has aligned with their goals of meeting their target 2% inflation goal. The PCE Index release numbers, the Federal Reserve’s preferred inflation indicator, have shown everything is within expectations. So while the rate cuts may be a gradual process, there is much optimism that they are coming.  Following those reports were the Personal Income Spending, GDP Estimates, and Consumer Confidence pending the holidays. Both the Persona Income and Spending have shown very strong results ahead of the holidays with the income beating expectations. This is met by extremely strong confidence coming from consumers as we see a 16-month high. This is finally corroborated by the GDP revisions which have shown the economy has shown steady growth for the entirety of the year.

PCE Index

The rate of inflation rose in October and moved further away from the Federal Reserve’s 2% goal, confirming a recent uptick in prices that could cajole the central bank into cutting interest rates less aggressively. The Federal Reserve’s preferred personal-consumption expenditures price index climbed 0.2% last month for the second month in a row, the government reported Wednesday.

Consumer Confidence

Consumer confidence reached a 16-month high in November, as Americans grew more optimistic about 2025. This optimism was fueled by rising stock prices, easing inflation, and a strong U.S. job market. The Conference Board reported on Tuesday that its consumer confidence index increased to 111.7 in November, up from a revised 109.6 in October, marking its highest level since mid-2023.

Personal Income/Spending

Consumer spending grew at a solid pace in October, driving a U.S. economic expansion that shows no signs of slowing as 2024 comes to a close. According to government data, household spending increased by 0.4% last month, while personal income rose by 0.6%, aligning with Wall Street expectations. Additionally, spending in September was significantly stronger than originally reported.

GDP Estimates

The U.S. economy grew at an annual rate of 2.8% in the third quarter, according to revised figures, suggesting it entered the crucial holiday shopping season with strong momentum.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.08% with the current rate at 6.10%
• 30-Yr FRM rates saw a decrease of -0.03% with the current rate at 6.81%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.23% for this week. Current rates at 6.22%
• 30-Yr VA rates saw a decrease of -0.23% for this week. Current rates at 6.24%

Jobless Claims

Initial Claims were reported to be 213,000 compared to the expected claims of 220,000. The prior week landed at 217,000.

What’s Ahead

The schedule is fairly packed, featuring key reports such as the Final Manufacturing PMI, which will reflect the year’s production performance, along with non-farm payrolls, hourly earnings, the unemployment rate, consumer credit data, and the year-end Consumer Sentiment report from the University of Michigan.