Market News April 15 (Time to lock)

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Weaker Overnight; Debt Ceiling Clues

MBS Road Signs 4-15-24

Week of April 8, 2024 in Review

Inflation has improved significantly after peaking in 2022, but recent hotter than expected readings have stalled the progress lower. Here are last week’s headlines:

§ Inflation Progress Stalls

§ Wholesale Inflation Better Than Feared

§ Continuing Unemployment Claims Top 1.8 Million

§ Latest on Small Business Optimism…Or Lack Thereof

Inflation Progress Stalls

The latest Consumer Price Index (CPI) showed higher than expected inflation in March, with the headline reading up 0.4% from February. On an annual basis, CPI moved in the wrong direction, rising from 3.2% to 3.5%. The Core measure, which strips out volatile food and energy prices, increased 0.4% while that annual reading remained at 3.8% (though it was expected to decline to 3.7%).

What’s the bottom line? March’s hotter than expected consumer inflation report continues a trend we’ve seen in recent months, as rising energy and shelter costs have added to pricing pressure.

Price stability is part of the Fed’s dual mandate. When inflation became rampant a few years ago, the Fed began aggressively hiking their benchmark Fed Funds Rate (the overnight borrowing rate for banks) to slow the economy and rein in inflation. While inflation has fallen considerably after peaking in 2022, the progress lower has slowed, which could delay the Fed’s timing for rate cuts this year.

Given that maximum employment is the other part of the Fed’s dual mandate, a cooling job market with rising unemployment could pressure them to cut the Fed Funds Rate sooner rather than later. However, the overall strength of March’s Jobs Report, including the falling unemployment rate, will likely not add any pressure to their timeline.

Wholesale Inflation Better Than Feared

The Producer Price Index (PPI), which measures inflation on the wholesale level, rose 0.2% in March, just below estimates. On an annual basis, PPI rose from 1.6% to 2.1%, but this was better than the 2.2% estimate. Core PPI, which strips out volatile food and energy prices, was in line with forecasts at a 0.2% rise. The year-over-year reading rose from 2% to 2.4%, just above forecasts.

What’s the bottom line? Overall, the monthly PPI readings were tame and better than feared, which was a relief after the hot CPI readings that were reported the previous day. Plus, some of the PPI components are factored into another important consumer inflation measure called Personal Consumption Expenditures (PCE), which is the Fed’s favored measure, and this could potentially lead to a slightly better PCE report when that data is released on April 26.

Continuing Unemployment Claims Top 1.8 Million

Initial Jobless Claims fell by 11,000 in the latest week, retreating from a two-month high, as 211,000 people filed for unemployment benefits for the first time. However, Continuing Claims surged higher by 28,000, with 1.817 million people still receiving benefits after filing their initial claim.

What’s the bottom line? Initial Jobless Claims can be volatile from week to week, but their relatively low level suggests that employers are still trying to hold on to their workers.

Yet, Continuing Claims are still trending higher near some of the hottest levels we’ve seen since November 2021, as it’s become harder for some people to find new employment once they are let go. This coincides with the New York Fed’s latest Survey of Consumer Expectations. Respondents noted that the mean probability of finding a job within three months of losing one is now at the lowest level in almost three years.

Latest on Small Business Optimism…or Lack Thereof

The National Federation of Independent Business (NFIB) Small Business Optimism Index fell to 88.5 in March. This is the weakest reading since December 2012 as “owners continue to manage numerous economic headwinds,” per Chief Economist Bill Dunkelberg.

What’s the bottom line? The NFIB noted that inflation is back on top as the biggest problem small businesses are facing, as owners are likely feeling the impact of higher oil prices and the stalling progress on reducing pricing pressure. Plans to hire also fell for the fourth straight month. Despite talk of a strong economy, small businesses are still feeling pessimistic.

What to Look for This Week

We’ll kick off the week Monday with an update on home builder sentiment for this month. Tuesday brings news on March’s Housing Starts and Building Permits, while Existing Home Sales data follows on Thursday.

We’ll also get an update on March’s Retail Sales and the latest manufacturing data for the New York region on Monday. Jobless Claims and manufacturing for Philadelphia will be reported Thursday.

Technical Picture

After last Wednesday’s sharp decline due to the higher-than-expected CPI numbers, Mortgage Bonds were able to bounce higher off support at 99.647 on Friday. The 10-year ended last week trading at around 4.52%. While this is still high, it’s an improvement from highs hit earlier in the week.

Thank you MBS Highway

Warm Regards, Patty Newby & theLoanDesigners

Reviews

"quick response"

susan b

"STAY AWAY! We used Thrive mortgage/Patty Newby to get a short term loan, the basic terms being that we had 6 months to refinance it (or pay it off). We purchased our new home, then put our other home on the market. When we weren't getting buyers or interest in our old home, we needed to find a way to refinance the loan. Asked Thrive for quotes on down payments, they gave us numbers that turned out to be WAY off-saying we needed 40% down. When I asked why, I was advised by Patty Newby to just "pay off my car" (??). We decided to unlist our property to sell it ourselves to an investor. The same day, I received a call from Patty Newby- stating that our house "can't be off the market", and she told me “You have 24 hours to get the house on the market or I will report you". I asked her for our contract so I could understand my rights. For 4 days, I received threatening emails, and calls daily from Patty Newby harassing me to get my house back on the market. After reviewing the contact-it turned out- there was NOTHING in the contract surrounding a requirement that our old home be on the market, or even that we sell it at all. I questioned Patty on this, and she responded with "oh yea, you're on the old paperwork, so its fine". No apologies from her after 4 days of constant demands and threats! The threats and demands made by Patty Newby that were all based on a lie created extreme distress for us and caused delays in us selling our home since we were in fear. Then we find out, she was completely lying to us! Because of the threats, the lies, Thrive giving us incorrect numbers several times, we needed to end our business with them. We used another lender to settle the loan without issue, and no, it didn’t take a 40% down payment to secure a new loan, nor did I need to pay off my car. Patty is HIGHLY incompetent! It is unbelievable that a mortgage company would threaten a customer the way she threatened and harassed us. Steer Clear of this business!"

cristy lovick

"STAY AWAY! We used Thrive mortgage, Patty Newby, to get a home2home loan (short term loan), the basic terms being that we had 6 months to refinance it (or pay it off). We purchased our new home, then put our other home on the market. When we weren't getting buyers or interest in our old home, we needed to find a way to refinance the loan. Asked Thrive for quotes on down payments, they gave us numbers that turned out to be WAY off-saying we needed 40% down. When I asked why, I was advised by Thrive (Patty Newby) to just "pay off my car". I didn't think that was the right thing to do to lower a down payment requirement, very odd financial advice! We decided to unlist our property to sell it ourselves to an investor. The same day, I received a call from Patty Newby- stating that our house "can't be off the market", & she told me “You have 24 hours to get the house on the market or I will report you". I asked her for our contract so I could understand my rights. For 4 days, I received threatening emails, and calls daily from Patty Newby harassing me to get my house back on the market. After reviewing the contact-it turned out- there was NOTHING in the contract surrounding a requirement that our old home be on the market, or even that we sell it at all. I questioned Patty on this, and she responded with "oh yea, you're on the old paperwork, so its fine". No apologies from her after 4 days of constant demands and threats! The threats and demands made by Patty Newby (that were all based on a lie) created extreme distress for us and caused delays in us selling our home since we were in fear. As it turned out, she was completely lying to us! Because of the threats, the lies, +Thrive giving us incorrect numbers several times, we needed to end our business with them. We used another lender to settle the loan without issue, and no, it didn’t take a 40% down payment to secure a new loan, nor did I need to pay off my car. Patty is HIGHLY incompetent! It is unbelievable that a mortgage company would threaten a customer the way she threatened and harassed us - the threats were based on lies or ignorance on her part! Patty didn't even know the terms of the contracts she was basing her threats on. Steer Clear of this business!"

cristy l