Inflation will be the focus for this week

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Published Date 9/11/2023

Overnight the 10 year note traded at 4.31% +4 bps, by 8:30 am ET 4.29%. MBSs opened +3 bps from Friday’s close and -8 bps from 9:30 am Friday. This is inflation week with CPI, PPI, import and export prices plus a lot more.

There isn’t any new news this morning, no data, just the $44B 3 year note auction. The ECB meets this week and likely will increase its base rate once again. Our FOMC meets a week from Wednesday with no one thinking the group will increase rates. Expect the Fed to hold steady with most attention now focusing on the November FOMC meeting. Both August CPI and PPI on a month/month over basis likely to show increases from July levels, however the year/year measurements, more critical than month/month reads are expected to show inflation lower than in July.

The G-20 meeting in India didn’t lead to any significant news. Biden called China's economic situation a "crisis," citing issues in the real estate sector and high youth unemployment. "One of the major economic tenets of his plan isn't working at all right now," Biden said of Xi, without elaborating. "I'm not happy for that, but it's not working." "I don't think this is going to cause China to invade Taiwan," Biden said of the country's economic troubles. "As a matter of fact, the opposite, probably doesn't have the same capacity that it had before."

At 9:30 am the DJIA opened +163, NASDAQ +122, S&P +30. 10 year note +2 bps. FNMA 6.0 30 year coupon at 9:30 am -4 bps and –20 bps from 9:30 am Friday.

At 1 pm Treasury will auction $44B of 3 year notes.

After dipping on a year-over-year basis for five consecutive months—the longest run of declines in 11 years—U.S. home prices rose in July. The surprisingly quick recovery, driven in large part by an unusually low inventory of homes for sale, suggests that the residential real-estate downturn is turning out to be shorter and shallower than many housing economists expected.

The House is back in session this week, and that means one thing: a race against the shutdown clock. Lawmakers have until September 30th to fund the government, as Congress has not cleared any of its 12 annual appropriations bills, though there has been more progress than in the recent years. Still, lawmakers are expecting to need a temporary stopgap measure to avert a shutdown in October.

This Week’s Economic Calendar:

Monday,

1 pm $44B 3 year note auction

Tuesday,

6 am August NFIB small business optimism index (91.7 from 91.9)

1 pm $35B 10 year note auction (9years-11months)

Wednesday,

7 am weekly MBA mortgage applications

8:30 am August CPI (month/month +0.6% from +0.2%, year/year +3.6% from +3.2%; core CPI month/month +0.2% unchanged from July, year/year +4.4% from 4.7% in July)

1 pm $20B 30 year bond auction (29years-11 months)

2 PM August Treasury budget statement

Thursday,

8:30 am August PPI (month/month 0.2% from +0.3%, year/year +1.3% from +0.8%; core PPI month/month 0.2% from +0.3%, year/year +2.2% from +2.4%)

Weekly jobless claims (225K from 216K)

August retail sales (+0.2% from +0.7%, ex vehicles +0.4% from +1.0%, ex vehicles and gas +0.2% from +1.0%)

Friday,

8:30 am Sept Empire state manufacturing index (-10.0 from -19.0)

August import and export prices (imports month/month +0.3% from +0.4%; exports month/month +0.4% from +0.7%)

9:15 am August industrial production and capacity utilization (production +0.1% from +1.0%, capacity utilization 79.2% from 79.3%)

10 am mid-month U. of Michigan consumer sentiment index (69.5 from 69.5 at end of July)

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

Guardian Mortgage, a division of Sunflower Bank, N.A.