Shortest day of the year sees a jump in Consumer Confidence

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Published Date 12/21/2022

After two hard sell days the markets opened better this morning, settling down after the BofJ unexpectedly increased rates on Sunday. The 10 yr. note increased 21 bps on Monday and Tuesday, MBS prices dropped 68 bps.

MBA reported mortgage applications increased 0.9% last week, the second consecutive increase. Purchase apps were down 0.1% but re-finance apps increased 6.0%.

Today is the shortest day of the year, at 4:48 pm eastern today the precise moment in time is when the sun reaches its southernmost position in the sky. The sun stops falling and turns around, the days will bet longer now until June 21st. You know there isn’t anything today for the markets when we report this annual event.

Markets await Friday’s release of Nov PCE, the next inflation reading. The forecasts are for more slowing of inflation. PCE expected at 5.5% annually, down from 6.0% in October; core PCE +4.6% from 5.0%. Inflation has slowed, that isn’t news, neither is the outlook from the Fed that it will continue increasing rates. The present thoughts mingling is two more 25 bp increases before the Fed stops. The question hanging is what shape the economy will be in, a recession or wages continue to increase leading to continued inflation concerns. In 2023 stock investors will have a lot to navigate.

Next year a potentially more moderate FOMC as the rotation changes the players. James Bullard of the St. Louis Fed, Loretta Mester of the Cleveland Fed and Esther George of the Kansas City Fed — all of whom have favored sharply higher interest rates to help curb inflation — will lose their votes; replacing them Chicago Fed’s new president, Austan Goolsbee, believed to be dovish, Philadelphia’s Patrick Harker and Dallas’s Lorie Logan, both seen as centrists, and Minneapolis’s Neel Kashkari, who is currently an arch hawk.

At 9:30 am the DJIA opened +294, NASDAQ +48, S&P +27. 10 yr. at 9:30 am -5 bps to 3.64% taking the yield back to where it ended on Monday. FNMA 5.5 30 yr. coupon at 9:30 am +33 bps from yesterday’s close and +38 bps from 9:30 am yesterday.

At 10 am Nov existing home sales, sales expected at 4.200 mil from 4.43 mil, sales declined to 4.09 mil, m/m -7.7%, yr./yr. -35.4%. Dec consumer confidence index from the Conference Board was expected at 101.0 from 100.2, as released the index jumped to 108.3.

Source: TBWS

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