With the release of the PCE Index data, we are seeing the trend hold as inflation continues to slow down. This gives the Federal Reserve room to continue its rate cuts in the future. Following the positive news for inflation data, the GDP has also seen a larger-than-expected growth of 3% this quarter. The only data running against the tide is the Consumer Confidence reports, which reported to show that consumers are at their most anxious since 2021. We should expect a greater impact on the lending and broader markets ahead of the elections.
PCE Index
The Federal Reserve’s preferred PCE index inched up just 0.1% last month, the government said Friday. This matched the forecast of economists polled by The Wall Street Journal. The increase in inflation in the past 12 months slipped 2.2% from 2.5%, marking the lowest level since early 2021. The Federal Reserve is aiming to bring inflation down to 2% a year.
GDP Estimates (second)
The last of three updates on U.S. growth in the second quarter showed the economy expanded at a solid 3.0% annual pace — and there’s no sign it has taken a big turn for the worse. Gross domestic product, the official scorecard of the economy, was unchanged from the prior 3.0% estimate, the government said Thursday.
Consumer Confidence
Consumer confidence fell in September to a three-month low ahead of a pivotal U.S. election whose outcome could hinge on which presidential candidate voters think will do a better job on the economy. Americans were more worried about the job market in light of a steady rise in unemployment and greater difficulty in finding work. Another source of distress was the high cost of living after several years of severe inflation.
Primary Mortgage Market Survey Index
- 15-Yr FRM rates saw an increase of 0.01% with the current rate at 5.16%
- 30-Yr FRM rates saw a decrease of -0.01% with the current rate at 6.08%
MND Rate Index
- 30-Yr FHA rates saw a 0.09% increase for this week. Current rates at 5.79%
- 30-Yr VA rates saw a 0.08% increase for this week. Current rates at 5.80%
Jobless Claims
Initial Claims were reported to be 218,000 compared to the expected claims of 223,000. The prior week landed at 222,000.
What’s Ahead
Up next are the non-farm payrolls, a key indicator of the economy that shows whether wages are keeping up with inflation. Additionally, there will be production estimates from the Manufacturing Index and the usual job data releases.
The long-awaited week has come and within expectations, the Federal Reserve has decided to reduce interest rates for central banks by 50 basis points. This is the bigger of the two options for a rate cut, with the lesser being 25 basis points. The impact of this cannot be understated as this gives an official nod that the economy is in a good spot and inflation is under control, according to the Federal Reserve’s outlook on the data. The only black mark on the week of releases is the U.S. Leading Economic Indicators showing the economy has been in a slower trend for the past 6 months. The Federal Reserve, despite the rate cut, has continued to remain hard in its stance about not cutting rates too quickly. This will likely depend on future data.