Markets will be focused on the Friday inflation data this week

___

Published Date 7/22/2024

The week likely filled with political comments, but markets will be fixated on positioning for Friday’s inflation data. The estimates are encouraging that inflation in June declined. If that proves out the outlook for a rate cut soon will increase. The data hits Friday, but in the meantime, there is $183B of treasury auctions, weekly claims, durable goods orders, existing and new home sales. There is potential for volatility this week coming from politics.

On inflation and a rate cut or two doesn’t assure rates will decline much. We have talked about it numerous times here, the massive debt the US has, it will take higher rates than otherwise to fund it. According to recent data, the amount of government debt from major nations is seen swelling by $2 trillion this year to a record $56 trillion, according to the OECD, but that doesn’t square with projections of the US deficit alone this year is seen at $1.9 trillion. The takeaway, US and global rates will stay higher than otherwise if debt were not out of control.

At 9:30 am the DJIA opened +123, NASDAQ +189, S&P +36. 10 year at 9:30 am 4.22% -2 bps. FNMA 6.0 30 year coupon at 9:30 am +2 bps from Friday’s close and +1 bp from 9:30 am Friday, the 6.5 coupon +4 bps and +3 bps from 9:30 am Friday.

There isn’t any data Monday.

This Week’s Economic Calendar:

Tuesday,

10 am June existing home sales (4.00 million from 4.11 million)

Richmond Fed manufacturing index (-7 from –10)

1 pm $69B 2 year note auction

Wednesday,

7 am weekly MBA mortgage application

9:45 am PMI Flash July indexes (manufacturing index 51.6 from 51.7, services index 55.0 from 55.1 in June)

10 am June new home sales (640K from 619K)

1 pm $70B 5 year note auction

Thursday,

8:30 am weekly jobless claims (238K from 243K)

June durable goods orders (+0.5%, ex transportation +0.2%, core capital goods +0.1%)

The advance Q2 GDP (+1.8% from +1.4% in Q1, personal consumption expenditures (+2.0% from +1.5% in Q1)

Advance June US trade deficit (-$98.0B from -$99.4B in May)

1 PM $44B 7 year note auction

Friday,

8:30 am PCE month/month inflation +0.4% from +0.5%, year/year +2.5% from +2.6%; core month/month +0.1% from +0.1%, year/year 2.5% from 2.6%)

June personal income and spending (income month/month +0.4% from +0.5%; spending +0.3% from +0.2%)

10 am July mid-month U. of Michigan consumer sentiment index (66.0 unch from June)

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker - NY Department of Financial Services; Licensed Mortgage Banker - CT Department of Banking; Licensed Mortgage Banker - PA Department of Banking, Licensed Mortgage Lender – FL Office of Financial Regulation

All rates, fees and programs are subject to change without notice.