Good Monday AM,

Bond markets are flattish for the moment as traders reassess the speeches form Jackson Hole.

All Central Bankers echoed the same sentiment that inflation needs to come down and it appears that it is. The unknown is if inflation will bounce upwards from here. I guess the argument for a more conservative approach and potentially more tightening (rate hikes) is that in a broad way, demand continues to outweigh supply and with that, prices will rise (inflation). That said, the supply/demand imbalance seems to be narrowing quickly and there are signs of stress popping up throughout the economy (used car prices have tanked, wage gains are muted, employment softening, rental costs decreasing, etc..)

This is a very big week for economic data (Home Price Indices, Jolts report, Consumer Confidence, ADP Payrolls, GDP, Pending Home Sales, Challenger Job Cuts, Unemployment Claims, ISM Manufacturing, Construction Spending, and the Jobs report.. to name just a few) and will certainly drive the Fed’s rate decision at the September meeting. I anticipate most of the data to be weaker than forecasted, we will see. For now, I think defense is the best policy until we have confirmation of a sustained rally.

As a side note, there will be a rally in bonds and when it starts, we could see bond yields improve by 50%.   

How about this for a statistic on the state of the industry.. The National Association of REALTORS®’ total membership in July 2023 is 1.56 million. There are about 547k active listings. That’s one listing per three NAR members, which doesn’t even include non-NAR real estate agents.   I came across the below infographic.. With student loan interest restarting, eh.. now, what do you think happens to retail sales when all of the black area moves into the light blue or worse, the pink.. This will be interesting to watch and could by itself, move the Fed in the next few months.

Please remain safe and stay healthy and make today great!