Good Wednesday AM on this best day of the week,

Data out today was uneventful.

Mortgage applications dropped another 7%. This doesn’t seem to be helping bonds which continue to just sell. In my mind I am picturing a toddler just hitting the sell button repeatedly like my kid used to buy stuff from the iPhone app store. Why??? Ugh! The Federal Reserve’s Beige Book on economic conditions is due later and there is a slew of speakers from the central bank on the slate giving speeches and taking part in panels. That includes Christopher Waller, John Williams, Michelle Bowman, Tom Barkin, Patrick Harker and Lisa Cook. No one is expecting the Fed to raise rates again. Just too much supply of Treasury bonds available to buy so yields are rising so supply and demand meet.

How about this new stat from our friends at Redfin?

A homebuyer must earn $114,627 to afford the median-priced U.S. home, up 15%, or $15,285, from a year ago, and up more than 50% since the start of the pandemic. Housing costs are higher than ever because of high mortgage rates and rising home prices. The average rate on a 30-year fixed mortgage was 7.57% during the week ending Oct. 12. But even though soaring mortgage rates have dampened demand, low inventory is causing home prices to increase. The typical U.S. home sold for about $420,000 in August, up 3% year over year and just about $12,000 shy of the all-time high hit in mid-2022. The typical U.S. homebuyer’s monthly mortgage payment is $2,866, an all-time high.

How were retail sales numbers so high yesterday (chart below)?

People just spending everything they have at the moment. Headwinds to consumption in the US appear to be mounting though in 4Q. Despite yesterday’s indicator showed a 0.7% acceleration, versus consensus of 0.3%, student loan repayments, approaching tax deadline in several states and “the renewed surge in borrowing costs,” are likely to “take an additional toll,” this quarter. With labor markets looking “set to continue easing.”

Please remain safe and healthy!