Woof. What a week.
Pretending it didn't happen won't help, so let's unravel it all.
Let's start off with the noise: Freddie shows rates only down 7BPS for the week, and MBA shows purchases up 8% for the week. These are relatively good metrics. Unfortunately, both are from data before we had a day with 100BPS worse movement for rates. That puts them into the "noise" category.
Now, let's get fiscal: CPI came out at .4%, over the consensus number of .3%. That's even lower than September's +.6%. Core came at .3% over the expected .2%. Why did that cause so much drama? Well, the heightened and continued inflation caused a lot of concern from the Fed members that were already on the watch for inflationary concerns. Many commented.
Waller: Commented that 50BPS should be considered.
Logan: Thought that we should do 2 25BPS hikes.
Hammack: Previously voted against a hike, and now said that more small, frequent hikes should be considered.
Goolsbee: Called the inflationary report "borderline disturbing".
PPI came out as a mixed bag, only .3% for the month for "only" 6.5% annualized inflation. Yeah, that's not helping us.
Prediction market has us at +28BPS for December, which means they're banking on the 25BPS hike for sure with chances on a 50BPS hike. I'm calling 25BPS in December, with more early next year.
In other news... high rates don't make people want to buy homes. Huh. NAR reported purchases down 5.5% for October to 3.75M homes. That's 8.8% down from last year, and the lowest since 2010. Not a great metric. Redfin showed similar, with 70% more sellers than buyers and the widest gap since 2013. Buyers hit a record low.
Then we hit Jensen down as CEO of NVidia to throw AI stuff through a loop and a Microsoft outage for some icing on the cake. Keep it interesting, world.
Have a great week!