The release of last week’s inflation data has left this week with very few significant data updates. The most important information will come from various Federal Reserve members speaking on different topics. They have consistently emphasized that they will closely monitor the data to decide whether further rate cuts are needed in their upcoming rate decision meeting. Much of the market is optimistic that rate cuts will continue. Additionally, several smaller retail sales data releases are expected soon, which will provide insight into the current strength of the economy.

Retail Sales

Retail sales increased 0.4% in September, with strength in a broad range of categories that overcame weak gas and auto spending, the U.S. Commerce Department said Wednesday. Economists polled by the Wall Street Journal had forecast a 0.3% gain.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.22% with the current rate at 5.63%
• 30-Yr FRM rates saw an increase of 0.14% with the current rate at 6.44%

MND Rate Index

• 30-Yr FHA rates saw a 0.01% increase for this week. Current rates at 6.13%
• 30-Yr VA rates saw a 0.01% increase for this week. Current rates at 6.14%
  

Jobless Claims

Initial Claims were reported to be 241,000 compared to the expected claims of 260,000. The prior week landed at 260,000.

What’s Ahead

A surprisingly light week ahead once again, with only the Federal Reserve’s Beige book and S&P Preliminary numbers for the Producer Manufacturing Index.

The CPI and PPI reports delivered their data, showing inflation figures slightly below expectations. However, the positive impact of these reports was tempered by hawkish comments from Federal Reserve members during recent meetings. Despite this, the overall outlook remains optimistic, as further rate cuts are anticipated. Lending partners have also responded positively, significantly lowering their lending rates over the past month.

Consumer Credit

Consumer credit increased by $8.9 billion in August, following a revised $26.6 billion surge in July, the Federal Reserve reported on Monday. This represents a 2.1% annual growth rate in August, a slowdown from the 6.3% rise in the previous month. Economists surveyed by The Wall Street Journal had expected a larger increase of $13.2 billion in August.

CPI

U.S. wholesale prices were unchanged in September, pointing to subdued inflation in the economy. This suggests that a bigger-than-expected increase in consumer prices last month is unlikely to last. Economists polled by the Wall Street Journal had forecast a 0.1% increase.

PPI

A key measure of consumer inflation increased slightly more than expected in September, which could complicate the Federal Reserve’s plan to cut U.S. interest rates twice more this year. The ‘core’ consumer price index, which excludes food and energy, rose by 0.3% for the second consecutive month, according to a government report on Thursday. Wall Street analysts had predicted a smaller increase of 0.2% for this core inflation measure.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.16% with the current rate at 5.41%
• 30-Yr FRM rates saw an increase of 0.20% with the current rate at 6.32%

MND Rate Index

• 30-Yr FHA rates saw a 0.08% increase for this week. Current rates at 6.12%
• 30-Yr VA rates saw a 0.07% increase for this week. Current rates at 6.13%
  

Jobless Claims

Initial Claims were reported to be 258,000 compared to the expected claims of 230,000. The prior week landed at 225,000.

What’s Ahead

There will be a very light week ahead after the release of the CPI and PPI reports, with only regular jobs data to note.

Last week was a fairly light week, with the non-farm payroll data being the most significant release. The data showed that payrolls are growing at a faster rate than historical trends suggest, which could indicate that inflation is still above the Federal Reserve’s target. In contrast, the upcoming week has a busy schedule, with many important economic releases lined up back to back.

Non-Farm Payrolls

Hourly pay for American workers rose a sharp 0.4% in September – above expectations – to put the increase over the past 12 months at 4.0%. That’s up from 3.9% in the prior month. Wages are rising faster compared to the last few years before the pandemic. Wage gains rose just slightly over 3% on average in 2018 and 2019 before the coronavirus exploded.

If wages keep growing at a 4% rate, it could call into question the Fed’s view that labor costs will remain non-inflationary.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.09% with the current rate at 5.25%
• 30-Yr FRM rates saw a decrease of 0.04% with the current rate at 6.12%

MND Rate Index

• 30-Yr FHA rates saw a 0.25% increase for this week. Current rates at 6.04%
• 30-Yr VA rates saw a 0.26% increase for this week. Current rates at 6.06%
  

Jobless Claims

Initial Claims were reported to be 225,000 compared to the expected claims of 220,000. The prior week landed at 219,000.

What’s Ahead

Next week will be a heavy week, starting with key inflation reports like the CPI and PPI. These will be followed by the FOMC Minutes, Consumer Credit data, and the University of Michigan Consumer Sentiment report.

With the release of the PCE Index data, we are seeing the trend hold as inflation continues to slow down. This gives the Federal Reserve room to continue its rate cuts in the future. Following the positive news for inflation data, the GDP has also seen a larger-than-expected growth of 3% this quarter. The only data running against the tide is the Consumer Confidence reports, which reported to show that consumers are at their most anxious since 2021. We should expect a greater impact on the lending and broader markets ahead of the elections.

PCE Index

The Federal Reserve’s preferred PCE index inched up just 0.1% last month, the government said Friday. This matched the forecast of economists polled by The Wall Street Journal. The increase in inflation in the past 12 months slipped 2.2% from 2.5%, marking the lowest level since early 2021. The Federal Reserve is aiming to bring inflation down to 2% a year.

GDP Estimates (second)

The last of three updates on U.S. growth in the second quarter showed the economy expanded at a solid 3.0% annual pace — and there’s no sign it has taken a big turn for the worse. Gross domestic product, the official scorecard of the economy, was unchanged from the prior 3.0% estimate, the government said Thursday.

Consumer Confidence

Consumer confidence fell in September to a three-month low ahead of a pivotal U.S. election whose outcome could hinge on which presidential candidate voters think will do a better job on the economy. Americans were more worried about the job market in light of a steady rise in unemployment and greater difficulty in finding work. Another source of distress was the high cost of living after several years of severe inflation.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.01% with the current rate at 5.16%
• 30-Yr FRM rates saw a decrease of -0.01% with the current rate at 6.08%

MND Rate Index

• 30-Yr FHA rates saw a 0.09% increase for this week. Current rates at 5.79%
• 30-Yr VA rates saw a 0.08% increase for this week. Current rates at 5.80%
  

Jobless Claims

Initial Claims were reported to be 218,000 compared to the expected claims of 223,000. The prior week landed at 222,000.

What’s Ahead

Up next are the non-farm payrolls, a key indicator of the economy that shows whether wages are keeping up with inflation. Additionally, there will be production estimates from the Manufacturing Index and the usual job data releases.

The long-awaited week has come and within expectations, the Federal Reserve has decided to reduce interest rates for central banks by 50 basis points. This is the bigger of the two options for a rate cut, with the lesser being 25 basis points. The impact of this cannot be understated as this gives an official nod that the economy is in a good spot and inflation is under control, according to the Federal Reserve’s outlook on the data. The only black mark on the week of releases is the U.S. Leading Economic Indicators showing the economy has been in a slower trend for the past 6 months. The Federal Reserve, despite the rate cut, has continued to remain hard in its stance about not cutting rates too quickly. This will likely depend on future data.

Federal Reserve Rate Decision

The Federal Reserve cut its policy interest rate by half a percentage point on Wednesday, a more aggressive move than many economists expected. The central bank opted to start “with a bang,” said Paul Ashworth, chief North America economist at Capitol Economics.

U.S. Economic Indicators

The leading indicators for the U.S. economy sank 0.2% in August, the privately run Conference Board said Thursday. That is the sixth straight monthly decline. The index fell 0.6% in July. The leading index is a composite of 10 forward-looking components designed to show whether the economy is in danger of falling into recession and where the economy is headed in the near term.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of –0.12% with the current rate at 5.15%
• 30-Yr FRM rates saw a decrease of -0.11% with the current rate at 6.09%

MND Rate Index

• 30-Yr FHA rates saw a 0.02% increase for this week. Current rates at 5.70%
• 30-Yr VA rates saw a 0.03% increase for this week. Current rates at 5.72%
  

Jobless Claims

Initial Claims were reported to be 219,000 compared to the expected claims of 229,000. The prior week landed at 231,000.

What’s Ahead

Following the rate decision, we have another important inflation report with the PCI Price Index, the Federal Reserve’s preferred inflation indicator, which is followed up by the GDP Estimates for the year. Consumer Confidence should also play a role, albeit a much smaller one.

The week for the Federal Reserve’s rate decision has finally come. This is the week everyone has been waiting which will decide whether we will see any rate cuts this year. There has been a lot of speculation that this will be the first rate cut and likely more in the future. With the Federal Reserve giving hints the data has been on track, the outcome of one seems very likely. With the previous week’s CPI and PPI statistics coming in, which both were slightly warmer than expected, the data still largely shows that inflation has been kept under control. This may affect the decision, but ultimately throughout the year, the data has been consistent with few surprises. The week rounded out with the Consumer Sentiment data reports showing favorable results, indicating that the current state of the economy is in a neutral position in the eyes of the average consumer.

Producer Price Index

U.S. wholesale prices showed a mild increase in August and reinforced the idea the rate of inflation is returning to low pre-pandemic levels. The moderate increase in wholesale costs follows a similarly mild rise in consumer prices last month. With inflation slowing, the Federal Reserve is widely expected to cut interest rates next week.

Consumer Price Index

The consumer price index rose a mild 0.2% in August, the government said Wednesday, in line with The Wall Street forecast. Yet a measure of prices that strips out volatile food and energy costs, known as the core rate, rose a somewhat stiffer 0.3%. That was a tick above the forecast and matched the biggest increase in five months.

Consumer Sentiment

The rise in sentiment, 0.54%, is the highest since May. Consumer sentiment rose to a four-month high in September, just ahead of the U.S. presidential election, as expectations about future inflation fell to the lowest level since 2020. Yet Americans are still “guarded” in their views about the economy.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of –0.20% with the current rate at 5.27%
• 30-Yr FRM rates saw a decrease of -0.15% with the current rate at 6.20%

MND Rate Index

• 30-Yr FHA rates saw a 0.01% increase for this week. Current rates at 5.68%
• 30-Yr VA rates saw no change for this week. Current rates at 5.69%
  

Jobless Claims

Initial Claims were reported to be 232,000 compared to the expected claims of 230,000. The prior week landed at 228,000.

What’s Ahead

The FOMC Rate Decision will take place on Sunday of this upcoming week.