Good Thursday AM from your Hometown Lender,

Finally, some reprieve.

The 10-yr has dropped 10bps and mortgage bonds have improved by 30bps. I would like to say the markets are recognizing the economy is slowing as today’s data (below) shows, but I am not convinced. PPI was a big surprise to the downside. It was expected to have increased, and it went negative. That is the definition of disinflation. Retail sales are anemic, so no one is out there buying (and Walmart announced it is raising prices this month due to tariffs).

It is more likely that today’s bounce is tied to technical moves as both Treasuries and Mortgage Bonds were up against a third line of support and finally improved. Fingers crossed it is more than that and markets recognize the hard data (what the Fed has been looking for) shows a weakening economy.

Not to get too technical but we need the 10-yr note yield to drop to 4.37% (currently at 4.45%) to get back in a downward rate channel. Not likely to happen today but maybe over the next few days.

Fed Chairman Powell was out on the speaking trail today and didn’t help our cause.

He reiterated that the Fed is on hold pending more data. I suspect he is more focused on employment than inflation right now but this is a moving target.

• Weekly Claims 229K vs 229K
• Retail Sales 0.1 vs 0.1
• Ex Autos 0.1 vs 0.3
• PPI MOM -0.5 vs 0.2
• Core PPI MOM -0.4 vs 0.3

Stay safe and make today great!