With both CPI and PPI reports staying within anticipated ranges, the broader market sentiment is cautiously optimistic about the Federal Reserve’s prospects of initiating rate cuts in 2024. The Federal Reserve’s primary objective is to achieve a soft landing for the economy, and it appears that their measures have yielded the desired results, as evidenced by recent low jobless claims and stable economic signals for 2024.
Consumer Price Index
Inflation Remains Tame: The Consumer Price Index (CPI) in November witnessed a modest 0.1% increase, largely attributed to lower oil prices. However, a critical measure of inflation, which includes costs of goods and services such as rent and used cars, showed higher expenses. Over the past 12 months, the all-items index increased by 3.1%, aligning with expectations.
Producer Price Index
Wholesale Prices Hold Steady: In November, wholesale prices in the United States remained unchanged, indicating a gradual easing of inflation. Lower gasoline prices played a significant role in this benign report, although prices in most major categories remained subdued. Economists, surveyed by the Wall Street Journal, had projected a 0.1% increase in the producer price index.
Primary Mortgage Market Survey Index
Interest Rate Trends:
- 15-Year Fixed-Rate Mortgage (FRM) rates saw a week-to-week increase of 0.09%, reaching the current rate of 6.38%.
- 30-Year FRM rates, on the other hand, experienced a week-to-week decrease of -0.08%, with the current rate standing at 6.95%.
MND Rate Index
- 30-Year FHA rates exhibited a significant -0.29% decrease for the week, with current rates at 6.14%.
- 30-Year VA rates also saw a notable -0.30% decrease for the week, with current rates at 6.15%.
Jobless Claims
Favorable Labor Market: Initial jobless claims have declined to 202,000, surpassing the expected claims of 221,000. In the prior week, claims were at 220,000.
What’s on the Horizon
Looking ahead, the data release schedule for next week appears less eventful, with the focus primarily on regular updates such as Jobless Claims and Personal Income Spending. Of note is the forthcoming Consumer Confidence report, expected to be released on Wednesday, which will be closely watched for insights into consumer sentiment.
