Vital Statistics: Stocks are lower this morning on no real news. Bonds and MBS are down. Minneapolis Fed President Neel Kashkari thinks the current rate regime will last a while. He didn’t rule out further rate hikes, although he doesn’t consider that a base case. “The FOMC targets 12-month headline inflation of 2 percent. While we saw rapid disinflation in the second half of 2023, that progress appears to have stalled in the most recent quarter (see Figure 1). The question we now face is whether the disinflationary process is in fact still underway, merely taking longer than expected, or if ..read more

Vital Statistics: Stocks are flattish this morning on no real news. Bonds and MBS are up. Home prices rose 5.6% year-over-year in March, according to the ICE Home Price Index. “Such strong price gains continue to plague would-be homebuyers in today’s higher-rate environment, but for existing homeowners the picture keeps growing brighter,” Walden added. “Homeowners with mortgages closed out the first quarter of 2024 with just a hair under $17T in home equity – an all-time high. Of that, a record $11T is tappable, meaning available for a homeowner to leverage while retaining a 20% equity cushio ..read more

Vital Statistics: Stocks are higher this morning on no real news. Bonds and MBS are up. The week ahead is pretty data-light, although we will get a lot of Fed-speak. The main number will be consumer sentiment on Friday, which will have the inflation expectations number. Fed Governor Michelle Bowman said that she thinks last year’s decline in inflation might have been an anomaly, and she is open to another rate hike. “While the current stance of monetary policy appears to be at a restrictive level, I remain willing to raise the federal funds rate at a future meeting should the incoming data in ..read more

Vital Statistics: Stocks are higher this morning after a weaker-than-expected jobs report. Bonds and MBS are up big. The economy added 175,000 jobs in April, according to the Employment Situation Report. This was well below the Street estimate of 243,000. The unemployment rate ticked up to 3.9%, which was above the consensus of 3.8%. Average hourly earnings rose 0.2% versus a 0.3% estimate and increased 3.9% on a year-over-year basis. Average weekly hours ticked down. The labor force participation rate was flat at 62.7%, while the employment-population ratio declined by 0.1%. Overall, this jo ..read more

Vital Statistics: Stocks are higher as the markets digest the latest decision from the Fed. Bonds and MBS are up. As expected, the Fed maintained interest rates at current levels, and indicated that “higher for longer” is a possibility. They added the sentence: “In recent months, there has been a lack of further progress toward the Committee’s 2 percent inflation objective.” It did announce that it is beginning to reduce its quantitative tightening beginning in June. It will reduce its monthly redemption cap for Treasuries from $60 billion to $25 billion. They made no such changes on the mort ..read more

Vital Statistics: Stocks are lower as we await the Fed decision at 2:00 pm today. Bonds and MBS are down. The economy added 192,000 jobs in April, according to the ADP Employment Report. “Hiring was broad-based in April,” said Nela Richardson, chief economist, ADP. “Only the information sector – telecommunications, media, and information technology – showed weakness, posting job losses and the smallest pace of pay gains since August 2021.” The Street is looking for 243,000 jobs in Friday’s jobs report. House prices rose 1.2% month-over-month in February, according to the FHFA House Price Inde ..read more

Vital Statistics; Stocks are lower this morning as the May FOMC meeting begins. Bonds and MBS are up. Fed-whisperer Nick Timaros of the Wall Street Journal says the Fed is planning to signal to the markets that it is comfortable keeping rates higher for longer, while stopping short of introducing the possibility of raising rates further. “Firmer-than-anticipated inflation in the first three months of the year has likely postponed rate cuts for the foreseeable future. As a result, officials are likely to emphasize that they are prepared to hold rates steady, at a level most of them e ..read more

Vital Statistics: Stocks are higher as we head into Fed week. Bonds and MBS are up. The big event this week will be the FOMC meeting on Tuesday and Wednesday. The markets don’t expect the Fed to make any changes to the Fed Funds rate, however the language of the press release will be critical, especially if it refers to risks to the upside on inflation which would open the door for future rate hikes. Aside from the Fed meeting, we will get a lot of important economic data with house prices on Tuesday, ISM data, and the jobs report on Friday. The problem of high house prices is a knotty one, w ..read more

Vital Statistics: Stocks are higher this morning after good earnings from Google and Microsoft. Bonds are up. Personal incomes rose 0.5% MOM in March, while personal consumption rose 0.8%. Spending rose 0.8%, driven by increases in healthcare and housing. Again, I point to the vibecession here – high consumer spending is usually associated with economic booms, however when the increased spending is driven by non-discretionary items, it doesn’t feel like a boom. Nobody gets a recreational root canal. The PCE Price Index – the Fed’s preferred measure of inflation came in more or less as expecte ..read more

Vital Statistics: Stocks are higher as investors like Tesla’s numbers. Bonds and MBS are down. New Home Sales rose 8.8% MOM in March to a seasonally adjusted annual rate of 693,000. This is up 8.3% on a year-over-year basis. The median new home price fell 2% on a YOY basis to $430,700. There is an 8.3 month supply of homes for sale. Pulte reported earnings per share that rose 32% compared to a year ago. Revenues rose 10% to $3.8 billion. Gross margins expanded 50 basis points YOY to 30%. CEO Ryan Marshall said this on the earnings conference call: Against generally favorable demand condition ..read more