Bonds Rallying Despite Higher Core PCE

After yesterday's quarter over quarter core PCE price index came in 0.2% higher than expected, we knew today's monthly PCE data would have to include higher numbers divided across the months of April, May, and June in some unknown proportion. If April and May were not revised, it suggested an unrounded monthly core PCE of 0.37 today, which would have rounded to a 0.4% headline versus the 0.1% forecast. But that would be very uncommon, so markets split the difference and figured the extra inflation would be spread more evenly across the quarter. Forecasters who updated their predictions changed to 0.2% for the m/m core number, and that's exactly what we got. The more we drill down, the better the news gets. After all, 0.2 is a rounded number. The unrounded version was 0.182... even better! Perhaps just as important was the fact that the housing component of the PCE data fell to its lowest level since it was first on the way up in 2021. The following heat map shows another way to visualize the progress: The main takeaway is really the same in that it shows significant cooling in what has been the most problematic sector. It also serves to remind us that there are months like January that will continue to distort 6 month and 1 year metrics. Bottom line to all this: the market knew the previous 0.1% forecast for today's core PCE was a long shot after yesterday. That's why we sold off yesterday instead of today. Now that today's PCE came out with what was probably the softest possible realization of yesterday's warning, bonds are breathing a small sigh of relief, moving to the stronger end of this week's range.

July 26, 2024 Download our Mobile App: Download our Mobile App: MBS Commentary Bonds Rallying Despite Higher Core PCE After yesterday's quarter over quarter core PCE price index came in 0.2% higher than expected, we knew today's monthly PCE data would have to include higher numbers divided across the months of April, May, and June in some unknown proportion.&nb... (read more) Rob Chrisman DPA, Virtual Assistant, Non-QM products; Events, Training, and Webinars The only thing constant is change. After 53 years, Southwest Airlines is ending its 100 percent open seating policy! (I don’t mind lining up.) People and companies have to adjust… Time waits for no one. What were concerts like in 1964, 60 years ago? ... (read more) Mortgage Rates 30 Yr. Fixed Rate 6.86% -0.05% Rate Change Points Mortgage News Daily 30 Yr. Fixed 6.86% -0.05 0.00 15 Yr. Fixed 6.31% -0.02 0.00 30 Yr. FHA 6.32% -0.06 0.00 30 Yr. Jumbo 7.04% -0.03 0.00 7/6 SOFR ARM 6.53% -0.02 0.00 30 Yr. VA 6.34% -0.06 0.00 Updates Daily - Last Update: 7/26 15 Yr. Fixed Rate 6.31% -0.02% Rate Change Points Freddie Mac 30 Yr. Fixed 6.78% +0.01 0.00 15 Yr. Fixed 6.07% +0.02 0.00 Updates Weekly - Last Update: 7/25 Rate Change Points Mortgage Bankers Assoc. 30 Yr. Fixed 7.00% -0.03 0.60 15 Yr. Fixed 6.63% +0.07 0.61 30 Yr. Jumbo 7.13% +0.02 0.38 Updates Weekly - Last Update: 7/10 MBS / Treasuries UMBS 30YR 5.5 99.66 +0.25 Price / Yield Change MBS UMBS 5.5 99.66 +0.25 UMBS 6.0 101.04 +0.15 GNMA 5.5 100.01 +0.16 GNMA 6.0 100.91 +0.12 Pricing as of: 7/26 5:31PM EST 10 Year US Treasury 4.1929 -0.0503 Price / Yield Change US Treasury 2 YR Treasury 4.386 -0.043 5 YR Treasury 4.075 -0.056 7 YR Treasury 4.115 -0.056 10 YR Treasury 4.193 -0.050 30 YR Treasury 4.452 -0.031 Pricing as of: 7/26 5:31PM EST Latest Video Fed’s key inflation gauge rose 2.5% in June from a year ago, in line with e... Consumers are struggling, home equity access can be resourceful, says Mered... Final July consumer sentiment revised higher Former Fed Vice Chair Roger Ferguson on June PCE and rate cut timeline Around the Web CNBC Feds key inflation gauge rose 2.5% in June from a year ago, in line with expectations CNBC Defining a buyer's market 'is always a bit tricky,' real estate expert says: 4 signs to monitor Eye on Housing Personal Saving Rate Drops to Lowest Rate Since November 2022 CNBC Sales of $100 million homes set to double this year as trophy properties recover Calculated Risk Blog Realtor.com Reports Active Inventory Up 36.9% YoY Eye on Housing Market Share of 5,000+ Square Foot Homes Declines in 2023 Calculated Risk Blog Personal Income increased 0.2% in June; Spending increased 0.3% Calculated Risk Blog Watch Months-of-Supply! CNBC 2-year Treasury yield dips as investors look to key inflation data Eye on Housing U.S. Economic Growth Accelerated in Second Quarter Federal Reserve Federal bank regulatory agencies seek comment on interagencyeffort to reduce regulatory burden Eye on Housing Housing Share of GDP Remains Above 16% Despite Marginal Declines in Residential Investment Calculated Risk Blog Hotels: Occupancy Rate Increased 1.0% Year-over-year

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