• Fed officials are starting to discuss slowing their rate hikes.
  • Yields declined, and the Treasury curve steepened in response.
  • The terminal rate came off the 5% level.

 

 

  • Next, we have some updates on inflation.
    • The Fed’s index of inflation expectations (see “further reading” below):

   Further reading 

 

  • BofA’s CPI forecast:

 

Source: BofA Global Research

 

  • The S&P Global (Markit) PMI report showed US business activity holding in contraction territory this month.

 

Source: Bloomberg   Read full article

 

  • The manufacturing PMI dipped below 50, …

 

 

  • with demand weakness worsening.

 

 

  • Factories’ future output index declined sharply.

 

 

  • The Conference Board’s consumer confidence index declined this month, coming in below market consensus.

 

 

  • Home prices declined sharply in August.

 

 

  • But it will take more pain to correct the housing-wages imbalance.

 

 

  • Below are home price declines since the peak by metro area.

 

 

  • Mortgage applications are down 42% from a year ago.

 

 

  • But mortgage applications point to significant deterioration in sales in the near future.

 

 

  • New home inventories remain at multi-year highs, …

 

 

  • The number of units for sale that haven’t been started hit a record high.

 

 

  • Pending home sales are crashing (2 charts), …

 

Source: Redfin

 

 

Market Data

 

  • Bloomberg’s commodity index is at support.

 

 

  • The S&P 500 is holding support at the 200-day moving average.

 

 

  • 2023 earnings projections are still too high. Market fundamentals remain weak.

 

 

  • The US dollar strength is taking a toll on corporate sales.

 

 

  • Analysts continue to downgrade the 2023 earnings estimates.

 

 

  • The US dollar index (DXY) is testing support at the 50-day moving average.

 

 

  • Nearly half of all tech stocks have fallen more than 30% this year.

 

 

Quote of the Week

 

“My bed is a magical place where I suddenly remember everything I forgot to do.” – Anonymous

 

Picture of the Week

 

Price changes since 2020:

 

 

 

All content is the opinion of Brian J. Decker