Good Friday morning from your Hometown Lender,

PPI was released today.

Sadly did not show the same tame inflation that CPI did yesterday. Markets are shaking it off at the moment but as both the 10-year treasury yield and Mortgage bonds are sitting at their respective trading channel tops, we could see some pullback if we do not break through. Buoying the higher PPI data (which does flow into CPI over the next few months) are comments by Chairman Powell and other Fed members who have made a clear change in their stance.

Additionally, there is a lot of media attention to last night’s Presidential press conference.

The media is reporting President Biden did a good job and may have swayed Democrats to stick with him to win reelection. I am apolitical in this analysis, but I did not see it the same way. If he (or the Democrats) wins, there is likely a better outlook for rates as inflation will likely moderate more quickly (higher taxes, less tariffs, more immigration, higher unemployment) although as with everything, there are two sides to the coin.

There is not much economic data to be released next week but there are a dozen or so Fed speakers.

Markets are showing a 93% chance of a September rate cut (I say why wait, we have a meeting in 2.5 weeks, cut then) and the odds of three rate cuts in 2024 are emerging… If the 10yr not doesn’t break lower before the end of the day, I am going to recommend locking as the risk for a rebound to higher rates becomes elevated.

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!