{"id":117,"date":"2023-11-14T14:35:16","date_gmt":"2023-11-14T21:35:16","guid":{"rendered":"https:\/\/bluebirdhl.blog\/?p=117"},"modified":"2023-11-14T14:35:17","modified_gmt":"2023-11-14T21:35:17","slug":"market-update-cpi-missed-low-10-yr-plummets-by-17-bps-so-far-to-under-4-50-and-still-trending","status":"publish","type":"post","link":"https:\/\/bluebirdhl.blog\/?p=117","title":{"rendered":"Market Update: CPI missed low &#8211; 10 yr plummets by 17 BPS so far to under 4.50 and still trending"},"content":{"rendered":"<a class=\"wp-block-read-more\" href=\"https:\/\/bluebirdhl.blog\/?p=117\" target=\"_self\">Read more<span class=\"screen-reader-text\">: Market Update: CPI missed low &#8211; 10 yr plummets by 17 BPS so far to under 4.50 and still trending<\/span><\/a>\n\n\n<p>Hello All,<\/p>\n\n\n\n<p>A good day for mortgage rates.&nbsp; CPI came in very close to what was thought to be possible in yesterdays write-up.&nbsp; However, Shelter continued to be strong.&nbsp; It came down materially from last months .6% reading to .3%, but if that had come in lower, we would have had a NEGATIVE Headline reading and an even lower CORE reading, which would have pushed the annual CORE rate into the 3.8% &#8211; 3.9% range.&nbsp; The good news is it was not .6%, but that really needs to cool further to get us to where we need to.&nbsp;<\/p>\n\n\n\n<p>Headline dropped to an annual rate of 3.2% on a 0% increase.<\/p>\n\n\n\n<p>CORE dropped to an annual rate of 4.0% on a .2% MoM increase.&nbsp;<\/p>\n\n\n\n<p>Chart with Headline (blue) and CORE (red) showing the Annualized rate of inflation as of each report.&nbsp; You can see the 3.2% and 4.0% as outlined above after today\u2019s release, which was October\u2019s data.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/mail.google.com\/mail\/u\/0?ui=2&amp;ik=5d4dccb906&amp;attid=0.2&amp;permmsgid=msg-f:1782552225315106662&amp;th=18bce5cdf77d2f66&amp;view=fimg&amp;fur=ip&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8IaJwR-Aug3Xms3j2CxR7lh2D7WrhTnm3L_YknBNgz_ai453_p4I717CE7QDiVZmhb_bJysPzh3JOZaPUdx8Le5yBk7-_GudkoadJdDLFYMwXU-lahTw08xEY&amp;disp=emb\" alt=\"\"\/><\/figure>\n\n\n\n<p>Some interesting thoughts when annualizing current CORE readings to see what the most recent trending has been. &nbsp;Remember, the Feds want CORE to get to .2%.&nbsp; That does not mean they will wait until .2% before they begin cutting or they will over shoot it.&nbsp; They have to find that balance, which is not now, but we made a positive step and likely took a hike in December 100% off the table.&nbsp;<\/p>\n\n\n\n<p>CORE:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The 3-month annualized rate was 3.4%, vs 3.1% in Sept<\/li>\n\n\n\n<li>The 6-month annualized rate was 3.2%, vs 3.6% in Sept<\/li>\n<\/ul>\n\n\n\n<p>Here is a good chart on the 1, 3, 6 and 12 month for key categories of the report:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/mail.google.com\/mail\/u\/0?ui=2&amp;ik=5d4dccb906&amp;attid=0.4&amp;permmsgid=msg-f:1782552225315106662&amp;th=18bce5cdf77d2f66&amp;view=fimg&amp;fur=ip&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ882mUl19dReu46EQOkGL-A1S95bWLo7HEzKFswGt72kb_AqXzz0PX6JuBfsf1ciyfzH88qjKZsLQT_jWgSfSJXJX2fqBHz-qJxNogXcS_dF1m3pVzL6HJv9CQ&amp;disp=emb\" alt=\"Image\"\/><\/figure>\n\n\n\n<p>Below is the chart with the major categories.&nbsp; Inside the actual report are tables that break down everything into the sub-categories and you can see what went up and what went down.&nbsp; Remember, each category has different weighting.&nbsp; Shelter is a big one that comprises over 34%.&nbsp; In the detailed chart, column 1 is the weighting.&nbsp; Here is the link to the BLS October CPI report to read in more detail and see what I am referencing here.&nbsp; The below charts come from this report.&nbsp; This is an easy read and will help you understand CPI much better.&nbsp;&nbsp;<a href=\"https:\/\/www.bls.gov\/news.release\/pdf\/cpi.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">https:\/\/www.bls.gov\/news.release\/pdf\/cpi.pdf<\/a><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/mail.google.com\/mail\/u\/0?ui=2&amp;ik=5d4dccb906&amp;attid=0.3&amp;permmsgid=msg-f:1782552225315106662&amp;th=18bce5cdf77d2f66&amp;view=fimg&amp;fur=ip&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9Ahda_XWJliQjqkTtU9RxjP05W7upMcdETFdcabdIotqaTWS5gEHHiWgTch2DgM9KEtSw60h-M9XYuJnjoKykMu04WPriJXNhl9iaCuYTbIpu8mqK6mWexxNQ&amp;disp=emb\" alt=\"\"\/><\/figure>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/mail.google.com\/mail\/u\/0?ui=2&amp;ik=5d4dccb906&amp;attid=0.1&amp;permmsgid=msg-f:1782552225315106662&amp;th=18bce5cdf77d2f66&amp;view=fimg&amp;fur=ip&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8n8LDAQBTzgWi-y-Q2KcvO_7xCbdFunxzehFQkTJUq_JgiQjcLFsxuYnqOX08zdq61ctXm5D85a_cS0il4u_YQgbtBlFBAgZ0kfYwAhWc01LZtTjeduslWM9M&amp;disp=emb\" alt=\"\"\/><\/figure>\n\n\n\n<p>What was the largest changes in Headline?<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Food dropped to flat vs up .4% &#8211; Food away from home is still elevated and actually went up (restaurants)<\/li>\n\n\n\n<li>Energy went down to -1.5%, which was expected and the main driver for the low Headline print<\/li>\n\n\n\n<li>New and Used cars both were negative with new vehicles dropping from .3% to -.1% month over month<\/li>\n\n\n\n<li>Shelter dropped from .6% to .3% as outlined above, but it was still up .3%.&nbsp; That needs to cool further.<\/li>\n\n\n\n<li>Transportation was still high at .8%, up from .7% last month<\/li>\n\n\n\n<li>Medical Care was flat month over month, but still elevated at .3%<\/li>\n<\/ul>\n\n\n\n<p>Next month, there is only a .2% number being replaced as you can see below.&nbsp; Energy prices will be a big factor in the headline number.&nbsp; CORE will hopefully drop down on cooling Shelter costs.&nbsp; CORE is heavily weighted to Shelter because Food and Energy is stripped out, so Shelter makes up 43% of CORE.&nbsp; So, we need rents to come down and we need the rent equivalent to also cool.&nbsp; That could be looked at as kind of rooting against the little business we have in a way on the rent equivalents.&nbsp; However, the counter to that is we need more homes for sale, more loans to do and more homes to sell, without the increasing prices.&nbsp; That is very possible to begin to happen, but we need rates to come down more for this to truly be impactful.&nbsp;<\/p>\n\n\n\n<p><br>My guess is homebuilders\u2019 stocks will move up materially today with light showing and such a positive day.&nbsp; &nbsp;Continue to chase homebuilders, they have inventory.<\/p>\n\n\n\n<p>Now, let\u2019s hope for another positive reading on the PPI tomorrow, followed by slower manufacturing data and what would be a massive win would be a Thursday large jobless claims jump.&nbsp;<\/p>\n\n\n\n<p>10 yr since starting this write-up has now moved down almost 20 BPS and is at 4.43!!!&nbsp; Big day for rates on the lower end, not so much for closer to market rates.&nbsp; The higher coupons were negative earlier but have since reversed to be closer to flat with UMBS up maybe 20 BPS.&nbsp; Lower coupons on buydown rates in the 5\u2019s have moved 130 BPS so far today!<\/p>\n\n\n\n<p><strong>Josh Erskine<\/strong>&nbsp;<\/p>\n\n\n\n<p>Chief Executive Officer<br><br>CalCon Mutual Mortgage LLC dba OneTrust Home Loans<br>Yellowstone RE Holdings LLC<br>Yellowstone Global Investments LLC<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Hello All, A good day for mortgage rates.&nbsp; CPI came in very close to what was thought to be possible in yesterdays write-up.&nbsp; However, Shelter continued to be strong.&nbsp; It came down materially from last months .6% reading to .3%, but if that had come in lower, we would have had a NEGATIVE Headline reading [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-117","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/bluebirdhl.blog\/index.php?rest_route=\/wp\/v2\/posts\/117","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bluebirdhl.blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bluebirdhl.blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bluebirdhl.blog\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/bluebirdhl.blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=117"}],"version-history":[{"count":1,"href":"https:\/\/bluebirdhl.blog\/index.php?rest_route=\/wp\/v2\/posts\/117\/revisions"}],"predecessor-version":[{"id":118,"href":"https:\/\/bluebirdhl.blog\/index.php?rest_route=\/wp\/v2\/posts\/117\/revisions\/118"}],"wp:attachment":[{"href":"https:\/\/bluebirdhl.blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=117"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bluebirdhl.blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=117"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bluebirdhl.blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=117"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}