Financial Report

Following the election results, the University of Michigan’s Consumer Sentiment Report painted a less-than-stellar picture, reflecting stagnation in sentiment. The prior week was relatively light, aside from the Consumer Sentiment data. However, the S&P PMI Industrial Numbers provided a brighter outlook, indicating some acceleration in manufacturing activity as the holiday season approaches. Looking ahead, the coming week is expected to deliver more significant data on inflation, including the Federal Reserve’s preferred inflation indicator, the PCI Index.

PMI Services Index

The economy sped up in November and kept the U.S. on track for another strong quarter of growth, fueled by optimism about falling interest rates and the prospect of a pro-business Trump administration. The first reading of the S&P U.S. Service Sector Index climbed to a 32-month high of 57.0 in November from 55 in the prior month.

Consumer Sentiment (University of Michigan)

The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers. Consumer sentiment continued to rise, according to the final November report for the Michigan Consumer Sentiment Index. The index rose 1.3 points (1.3%) from October’s final reading to 71.8. The latest reading was below the forecast of 73.0.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.03% with the current rate at 6.02%

• 30-Yr FRM rates saw an increase of 0.06% with the current rate at 6.84%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.06% for this week. Current rates at 6.45%

• 30-Yr VA rates saw an increase 0.08% for this week. Current rates at 6.47%

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

As the holiday season approaches, next week’s most significant report will center on the PCE Index. Additional reports, including Personal Income & Spending data and the final GDP estimates for the year, will follow.

With the release of the latest CPI and PPI data, inflation has increased month-to-month for the first time since March, marking the first rise in over seven months. The Federal Reserve has reiterated its goal of reducing inflation to a 2% target within a year. While this development doesn’t necessarily indicate an imminent interest rate hike, it suggests that current rates may remain unchanged for an extended period. Earlier optimism about a potential rate cut by the end of the year has significantly diminished in light of recent inflation figures and economic data. However, Retail Sales data presents a more positive outlook, showing continued economic growth ahead of the holiday shopping season.

Consumer Price Index

The consumer price index climbed 0.2% for the fourth month in a row, the government said Wednesday, matching the Wall Street forecast. The yearly rate of inflation crept up to 2.6% from 2.4%, marking the first upturn in seven months.

Producer Price Index

The PPI data met expectations overall but revealed that U.S. wholesale prices rose slightly faster in October. This suggests the Federal Reserve’s efforts to bring inflation back to low pre-pandemic levels may take longer than anticipated. Federal Reserve officials have described the recent uptick in inflation as a ‘bump,’ which could hinder the central bank from reducing high interest rates as quickly as Wall Street had hoped just a few months ago.

Retail Sales

Sales at retailers rose solidly in October and suggested the economy still has plenty of momentum heading into the holiday shopping season. Sales increased 0.4% last month, the government said Friday, and receipts in September were twice as strong as previously reported.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.01% with the current rate at 5.99%
• 30-Yr FRM rates saw a decrease of -0.01% with the current rate at 6.78%

MND Rate Index

• 30-Yr FHA rates saw a 0.09% increase for this week. Current rates at 6.39%
• 30-Yr VA rates saw a 0.07% increase for this week. Current rates at 6.39%

Jobless Claims

Initial Claims were reported to be 217,000 compared to the expected claims of 220,000. The prior week landed at 221,000.

What’s Ahead

Preliminary S&P Global US Manufacturing PMI will be early on the release schedule marking the first large end-of-the-year preliminary report. Following that immediately is the University of Michigan Consumer Sentiment Report.

Major inflation reports are scheduled for the coming week, including both the Consumer Price Index (CPI) and Producer Price Index (PPI). Based on recent data from the Personal Consumption Expenditures (PCE) Index and GDP estimates, the inflation data is expected to align with forecasts. The Federal Reserve has maintained a cautious (hawkish) stance, with expectations that current interest rates will stay steady following the recent rate decision. However, inflation is now nearing the Fed’s target rate, and the prospect of a ‘soft landing’ for the economy appears within reach. This optimistic outlook suggests potential rate cuts may be on the horizon.

Federal Reserve Rate Decision

In the face of slowing inflation and strong consumer spending, the Federal Reserve announced that it will keep the interest rate steady, holding the benchmark borrowing rate to a range of 5.2% to 5.5%.

Consumer Credit

By the numbers: U.S. consumer borrowing in September rose by only 1.4%, with most of the increase attributed to student loans, as Americans reduced their use of credit cards. Consumer credit rose by $6.0 billion in September, according to Federal Reserve data. Economists had forecasted a larger increase of $13 billion, based on a Wall Street Journal survey.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing an increase of 0.01% with the current rate at 6.00%
• 30-Yr FRM rates are seeing an increase of 0.07% with the current rate at 6.79%

MND Rate Index

• 30-Yr FHA rates are seeing a decrease of -0.17% for this week. Current rates at 6.40%
• 30-Yr VA rates are seeing a decrease of -0.15% for this week. Current rates at 6.43%

Jobless Claims

Initial Claims were reported to be 221,000 compared to the expected claims of 220,000. The prior week landed at 218,000.

What’s Ahead

Consumer Price Index and Producer Price Index inflation ahead. There are no other influential reports on the schedule.