Household spending dips more than expected

___

Published Date 1/27/2023

Prior to the key inflation release at 8:30 am ET the 10 year yield at 5.54% +4 bps. At 8:30 am Dec the highly anticipated personal consumption expenditures (PCE) presented no surprises, the data the same as most all forecasts, not less, not more. It is rare to see the reality as predicted. Month to month PCE expected 0.0% increased 0.1%, year/year 5.0% from 5.5% as forecast. The core PCE m/m +0.3% as expected and up from 0.2% in Nov, year/year +4.4% as expected and down from 4.7% in November. Dec personal income +0.2% from +0.3%, personal spending expected -0.1% was-0.2%. U.S. households cut spending, adding to signs of an economic slowdown. Underlying inflation cooled to its slowest pace since October 2021. The market initially was fractionally better, the 10 from 3.54% to 3.53% at 9 am and MBS prices that were down 11 bps on the report, at 9 am -5 bps.

At 9:30 am the DJIA opened -13, NASDAQ -39, S&P -10. 10 year 3.55% +5 bps. MBS prices holding well so far, the 5.5 30 year coupon at 9:30 am -9 bps and -14 bps from 9:30 am yesterday.

At 10 am the U. of Michigan consumer sentiment index, expected at 64.6, was 64.9.

Also at 10 am, Dec pending home sales were anticipated -0.1% after declining 4.0% in Nov, sales increased 2.5% m/m, year/year -34.2%.

The bellwether 10 continues its tight range this morning, unable to break support at 3.40% but on buying finding resistance at 3.60% for the last two weeks. Next week the FOMC, ECB and UK will meet. The Fed will likely increase the FF rate by 25 bps, that is well discounted at present levels. FOMC next Wednesday will temper any price gains.

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.

Wymac Capital, Inc.

LICENSING:
CalRE: 01121628
NMLS: 18766