Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)Within the PCE inflation data, both headline and core rose one tenth and the y/o/y gains were 2.2% and 2.7% respectively vs 2.5% and 2.6% in the month before. Food prices were up one tenth m/o/m but offset by the .8% fall in energy prices. Service prices continue to lead inflation higher, as it usually does while goods prices fell again.

2)Initial jobless claims totaled 218k, 5k below expectations partly offset by a 3k upward revision to last week’s print to 222k. The 4 week average was 225k vs 228k in the week before. 

3)The final September UoM consumer confidence index was 70.1 vs the preliminary read of 69 and up from 67.9 in August. Both Current Conditions and Expectation components were up m/o/m. One yr inflation expectations were 2.7%, the same as the early month read but down one tenth from August. The 5-10 yr view was 3.1% vs 3% in August. The UoM said, “This increase was seen across all education groups and political affiliations. Furthermore, all five index components gained, led by a 6% surge in one year business expectations.” Also, “While consumers remain very frustrated by the persistence of high prices, the share of consumers spontaneously blaming high prices for eroding their personal finances fell from 47% last month to 40% this month.” On the labor market, sentiment improved in the 2^nd monthly survey relative to the first and it seems that faith in the Fed was the reason on the heels of the 50 bps cut.

4)The multi year benchmark revisions to US GDP reflected a better than expected economy over the past few years.

5)As we get ever closer to the holidays, container shipping prices continue to fall with the Shanghai to Rotterdam journey down by $525 w/o/w and is now we have 10 straight weeks of declines to $4,157. That's about half the peak seen in July but more than double where it started the year. Air cargo rates were flattish w/o/w but still up sharply y/o/y.

6)The drop in mortgage rates continues to mostly help refi’s more so than purchases. The MBA said refi’s jumped 20.3% w/o/w and higher by 60% y/o/y as those who procured a mortgage rate north of 7% over the past few years I’m sure is refinancing. Purchases continue to rise but at a more modest pace, up by 1.4% w/o/w and flattish y/o/y, up by 2.4%.

7)New home sales in August were a bit above the forecast at 716k vs the estimate of 700k and July was revised up by 12k to 751k. Months’ supply rose to 7.8 from 7.3 but was 8.2 in June. The median home price was flat y/o/y, though is always volatile each month because of mix. Smoothing out this figure puts the 3 month average at 716k homes vs the 6 month average of 707k and the 12 month average of 682k.