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Market Snapshot 7/11/24 – Today’s CPI Report

Good Thursday morning from your Hometown Lender,

We have been focused for two weeks on today’s CPI report.

We knew it was going to create volatility and hoped it would be in our favor. The previous reports have been pointing toward lower inflation for two months.

Would today be the day we see real progress? YES, it is.

CPI came in at a negative .1% on expectations of +.2%. Core CPI, which we care more about since it omits food and energy which tend to be more volatile than other 198 categories included in the report, also came in below expectations at .1%.

I think about Fed Chairman Powell and how he always seems to be step ahead of the data release.

Earlier this week in advance of the CPI report, he spoke of lower inflation and the Fed getting ready to cut rates. Today’s CPI report supports that view. Other Fed officials are now out today saying it is time for a pivot. We have a Fed meeting in just under 3 weeks.

Could we see a rate cut in July?..

Let’s see what the PPI report looks like tomorrow but if it comes in tame as well, I think a July cut is back on the table and if not July, September is almost a certainty. Weekly Jobless Claims in a bit lower than expected at 222k, but still higher than a strong labor market should have.

Bonds are doing well.

Mortgage bonds are +20bps and the 10yr note yield is down to 4.18%, the lowest since March.

We are all feeling the hurt on home insurance and question what is really going on. Are the ridiculous rates justifiable?

The picture (from AM Best) below describes why rates have jumped.

As always, please let me know if you have any questions and if there is anything we can do to add value to your day.

Stay safe, and make today great!