Financial Report

The Consumer Price Index (CPI) is showing higher than expected inflation, and the Producer Price Index (PPI) is showing lower than expected inflation. The two are in conflict with each other; however, the Consumer Price Index is still the far greater indicator for inflation as it directly impacts the cost of living for everyone, not just production assets. 

Given the Federal Reserve’s recent speeches it would seem that there is very likely to be a delay in the rate cuts this upcoming quarter. They have stated numerous times they are driven largely by data and that data has proven that inflation is still not as quite under control as they had anticipated moving into Quarter 2. Lending partners have been responding in kind to the news as they have had strong rate increases across the board for the previous week.

Producer Price Index

The producer price index is more volatile than a similar survey of consumer prices, but it’s not pointing to a broad acceleration in U.S. inflation. To be sure, the PPI has moved higher in early 2024. The yearly rate of wholesale inflation climbed to an 11-month high of 2.1% in March from 1.6% in the prior month.

Consumer Price Index

The cost of consumer goods and services rose a sharp 0.4% in March, capping off a third straight month of elevated inflation readings that will make it hard for the Federal Reserve to cut interest rates soon. The increase in the consumer price index last month exceeded the 0.3% forecast of economists.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing an increase by 0.10% with the current rate at 6.16%
• 30-Yr FRM rates are seeing an increase by 0.06% with the current rate at 6.88%

MND Rate Index

• 30-Yr FHA rates are seeing a 0.25% increase for this week. Current rates at 6.70%
• 30-Yr VA rates are seeing a 0.26% increase for this week. Current rates at 6.72%

Jobless Claims

Initial Claims were reported to be 211,000 compared to the expected claims of 217,000. The prior week landed at 222,000.

What’s Ahead

The Beige Book report is the only impactful release next week. We should see a relatively calm week, as the weeks following inflation data reports often have a less-filled schedule. This upcoming week should feature the usual weekly reports in jobs data.

With the upcoming CPI and PPI reports this week, last week still had a number of important data points to consider. First, the non-farm payroll data, helping reveal the situation of pay versus inflation data giving an overall description of the state of the economy in the future.  Among that, the manufacturing data has shown to be contracting the past year, with the first signs of relief this month. Lastly, trade data has shown that the trade deficit has grown bigger than expected with Q1 coming to completion. 

All of these are broader indicators of the state of the economy and the most important data is to come this week, as inflation data will firmly decide when and where rates may be cut in the future. It appears to be becoming increasingly unlikely we will see a rate cut decision by the Federal Reserve in Q2. Many of the Federal Reserve’s Chairman had spoken last week, illuminating a resolve to resist rate cuts until “Inflation was under control.”

Non-farm Payrolls

March jobs report showing incredible strength of the job market in the U.S. with a 50% gap above the numbers expected. A strong job market is a strong economy.

U.S. Trade Balance

The numbers: The U.S. international trade deficit widened 1.9% in February to a seasonally adjusted $68.9 billion, the Commerce Department said Thursday. It is the third straight month with a wider deficit and the largest imbalance since last April. 

ISM Manufacturing

A barometer of business conditions at U.S. manufacturers turned positive in March for the first time in 17 months, in another sign that the industrial side of the economy is on the mend.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing a decrease by -0.05% with the current rate at 6.06%
• 30-Yr FRM rates are seeing an increase by 0.03% with the current rate at 6.82%

MND Rate Index

• 30-Yr FHA rates are seeing a 0.06% increase for this week. Current rates at 6.45%
• 30-Yr VA rates are seeing a 0.05% increase for this week. Current rates at 6.46%

Jobless Claims

Initial Claims were reported to be 221,000 compared to the expected claims of 213,000. The prior week landed at 212,000.

What’s Ahead

CPI and PPI data will very much decide whether we will be seeing rate cuts this upcoming quarter, with little in the way of other reports.

As expected from the prior inflation reports with CPI and PPI, the PCE index had also shown the same corollary among its data points, reporting a higher than expected increase for the month of February across all products.

In addition, the Chicago PMI had shown a declining trend of activity among businesses for the 6th week in a row. All this points to that there might be a case for the Federal Reserve to continue holding rates in the next rate decision coming up in the summer of 2024. There has been much speculation that the Federal Reserve will begin cutting rates at this time; however this is evidence of the contrary.

Consumer Sentiment Reports

The numbers: The final reading of consumer sentiment in March rose to a 32-month high, as Americans expressed more confidence that inflation would ease and reduce the financial strain on households. The second of two readings of the consumer-sentiment survey climbed to 79.4 from an initial 76.5.

Chicago PMI

The Chicago Business Barometer, also known as the Chicago PMI, weakened further in March, dropping to 41.4 from 44 in the prior month. This is the fourth straight monthly decline. Economists polled by the Wall Street Journal forecast a 45 reading.

PCI Index

Prices in the U.S. rose again in February based on the Federal Reserve’s preferred PCE index, reinforcing the view that inflation might not slow as much in 2024 as previously believed. The PCE index rose 0.3% last month, the government said Friday. That’s a touch below the 0.4% forecast.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing a decrease by -0.10% with the current rate at 6.11%.
• 30-Yr FRM rates are seeing a decrease by -0.08% with the current rate at 6.79%

MND Rate Index

• 30-Yr FHA rates are seeing a -0.07% decrease for this week. Current rates at 6.39%
• 30-Yr VA rates are seeing a -0.06% decrease for this week. Current rates at 6.41%

Jobless Claims

Initial Claims were reported to be 210,000 compared to the expected claims of 214,000. The prior week landed at 212,000.

What’s Ahead

This upcoming week has very little in the way of valuable reporting data. The following after next will contain further inflation data with the release of CPI and PPI reports. The only report that should be noted is the U.S. Trade Balance reports.