Morning Report: Big week of data

Posted on September 11, 2023 by Brent Nyitray

Vital Statistics:

Stocks are higher this morning as we head into a big week for data. Bonds and MBS are down.

The upcoming week will be dominated by the CPI and the PPI inflation reports. Since we have the September FOMC meeting next week, we won’t have any Fed-speak. We will also get retail sales and consumer sentiment. Homebuilder Lennar reports earnings on Thursday.

Not residential real estate related, but important nonetheless. The contract between the United Auto Workers and the big automakers expires on September 14. This will be a new test for union strength in a tight labor market. I wrote about the changes in the labor market and the potential effects on inflation in my latest Substack article: Unions and the 2% inflation target. Check it out and please consider subscribing.

Home prices peaked in June of 2022 and apartment rents are beginning to level off as well. Rent growth rose just 0.28% year-0ver-year in August. Apartment supply is set to explode with about 1 million units under construction. We are seeing big declines in places like Austin, Phoenix, Atlanta and Las Vegas.

Multi-fam housing starts are beginning to decline as high interest rates discourage construction.

Interesting article about how mortgage lenders treat student loan debt. The Obama-era student loan repayment plan allows borrowers to limit their student loan repayments to just 10% of discretionary income. This means that their DTI ratios are actually higher than they appear. Don’t forget student loan payments are resuming as well.

Nick Timaros of the Wall Street Journal (who has a reputation for understanding the Fed better than most) thinks the psychology of the Fed is changing. For the past year, the Fed has been unanimous that the risk to the economy is tightening too little, not too much. The balance of risks is changing, and more FOMC members are worrying about tightening too much, potentially causing a recession or financial turmoil,

“The risk of inflation staying higher for longer must now be weighed against the risk that an overly restrictive stance of monetary policy will lead to a greater slowdown than is needed to restore price stability,” said Boston Fed President Susan Collins in a speech last week. “This phase of our policy cycle requires patience.”

Filed under: Economy |

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12 Responses

  1. jnc4p's avatar
    jnc4p, on September 11, 2023 at 12:58 pm said:

    From your article:

    ” If we see a return of negotiating power for workers a return to 2% inflation might be in the cards.”

    Do you mean “might not be in the cards”? I would think that if unions can get anywhere near the goals you outline in the piece, inflation is going to perpetually run higher than 2% per year.

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  4. jnc4p's avatar
    jnc4p, on September 11, 2023 at 2:37 pm said:

    Appropriate for 9/11

    “The New Yorkers on 9/11
    I’ve spent over twenty years trying to find the people in this photo. I’m still looking.

    Patrick Witty
    Sep 11, 2023”

    https://patrickwitty.substack.com/p/the-new-yorkers-on-911

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    • Kevin S. Willis's avatar
      Kevin S. Willis, on September 12, 2023 at 4:05 pm said:

      You are correct. Also for Pete’s
      sake: “which culminated with a new low this week, as Carlson revived a debunked claim that Barack Obama smoked crack and had sex with a man many years ago.”

      Wow, I’m sure this guy referred to anyone discussing the Trump pee tape, or any if the unsubstantiated complaints against Trump or Cavanaugh, with similar scoffing derision.

      It was a better world when you just expected all the news to cover any salacious story about anyone because: ratings. This picking and choosing of winners and losers when it comes to acceptable salacious content is some bullshit.

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