MARKET UPDATE | 9.14.23 – Blue Bird Home Loans Blog

Again, PPI of limited concern as the increase was primarily gasoline – market holding after strong jobless claims report, negative PPI report and negative Retail Sales (all missed high / better than expected which is neg for rates)

Below is a good summary from one of our broker dealers.

The Retail numbers we mentioned on the webinar yesterday could miss based on seeing Gas, Apparel and New Cars up. This did in fact happen, with again Gasoline being the largest contributor. I am not sure why the expectations were so low, which is what we discussed that we could see a large miss. That did in fact happen.

No break yet in jobless claims. Another slight miss.

Overall, the market has held up yet again as this easily could have yet again pushed yields.

I still stand by that the market is starting to see the slowdown and we will begin to see that in the next set of reports, which is why I believe we are holding even with not god data for rates typically.

In addition, the European Central Bank did another 25 BPS which could also have upside pressure.

Some details below on all of this.

PPI:

Headline PPI up +0.7% mom (vs 0.4% expected) with ex Food and Energy +0.2% (vs +0.2% expected)
As with CPI yesterday, energy price increases were the largest contributor to reported inflation –with gasoline (and jet fuel) price increases having an outsized impact (gasoline with a 20% increase)

Retail Sales:

Headline retail sales up +0.6% mom (vs 0.1% expected)
Ex auto and Gas +0.2% (-0.1% expected)
Attention now focused on holiday sales with consumers under increasing pressure (inflation, depleted savings, limited ability to tap home refinancing for funding)

ECB—note how in sync Europe and ECB are with the US and the Fed:

ECB raises deposit rate 25bp to 4%
ECB President Christine Lagarde would not rule out further rate increases:

“With today’s decision, we have made sufficient contributions, under the current assessment, to returning inflation to target in a timely manner…The focus is probably going to move a bit more to the duration, but it is not to say — because we can’t say — that now that we are at peak.” (Bloomberg)

Josh Erskine

Chief Executive Officer

CalCon Mutual Mortgage LLC dba OneTrust Home Loans
Yellowstone RE Holdings LLC
Yellowstone Global Investments LLC

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