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Market Snapshot 9.14.22- PPI Came In As Expected

Good Morning on this best day of the week, Wednesday,

A recap from yesterday first, as the WSJ did a nice job in parts to offer insight. I am combining a few pieces below with some pretty pictures. Personal opinion is that I think the Fed should slow the rate hikes as the impact of the previous ones has not yet been fully felt, but the optics on that would be challenging. How do they explain if the Fed misses? Better to grind things to a halt and say “we had to”, than to take longer to get prices to stabilize and explain why it took longer and they didn’t do more.

The Labor Department’s inflation report for August came in hotter than many economists had expected, putting more pressure on the Federal Reserve to raise interest rates to bring price increases under control. Consumer prices rose 0.1% in August from July and were up 8.3% on the year, a slight easing from July, when year-over-year prices rose 8.5%. Excluding volatile energy and food categories, prices were up 0.6% on the month and 6.3% on the year. Prices for gasoline, used cars and airfare fell but those were offset by higher prices for food, medical care, electricity and natural gas. The average household is now spending about $460 more each month to buy the same basket of goods and services than last year, according to Moody’s Analytics. Fed officials raised interest rates by 0.75 percentage point at each of their last two meetings and appear on track to approve another such increase at their Sept. 20-21 gathering. The Dow fell 3.9%—more than 1,200 points—while the S&P 500 dropped 4.3% and the Nasdaq Composite 5.2%. All three indexes posted their steepest one-day losses since June 11, 2020.

On to today.

PPI (prices at the producer level) came in as expected. Mortgage bonds are positive and the ten year is also improved from yesterday’s closing. Equities are up marginally as well. No great rebound but we are not bleeding for the moment. Mortgage bonds are now sitting on the support level. If the ten-year breaks above 3.50%, anything can happen (rut row). Play defense.

Please remain safe and healthy, make today great!