Good Tuesday AM,

There is no meaningful news this morning, but bonds are showing some signs that they may hold their current levels. The ten-year opened below the 3% mark and remains below that benchmark. Mortgage Bonds have held the support level and have seen a good bounce. We may still retest the lows, and we could slide considerably if we slip below it, but for now it looks like we are more likely to move up in price (lower rates). It may not happen today. If it does happen, it will be tomorrow or Thursday. Friday is a big news day with the release of CPI. You may want to lock ahead of that report. Anything can happen.

In the absence of data, I am including an on point piece from Bloomberg on the real cost of inflation (we actually buy fewer goods).

There are all kinds of headwinds facing the consumer, most notably sky high inflation. But Americans continue to spend. That’s the message from a new look at card data, out yesterday from Bank of America. 

You can see, aggregate 2022 levels remain well above recent years. However the firm notes that total growth y/y is running below the headline rate of inflation, which means that real consumption may be running lower — people are spending more but taking home less real stuff, a contributing factor to dismal consumer sentiment readings by some measures.

Meanwhile yesterday, the Bloomberg Commodities Index hit yet another record yesterday, after having slipped through the middle of May.

This time it’s natural gas prices that are going nuts, and pushing the index to new heights. The reopening of China (which everyone knew was depressing prices somewhat) is almost certainly contributing to the overall upward move.

There are good reasons to think the US economy is not in a recession. But for the Fed, whose primary concern is inflation, there are still aren’t many signs (outside of a few pockets of the labor market maybe) of any meaningful cooling.

Please remain safe and healthy, make today great!