Morning Report: PCE Inflation comes in as expected

Posted on January 26, 2024 by Brent Nyitray

Vital Statistics:

Stocks are flattish this morning as earnings continue to come in. Bonds and MBS are flat.

Personal Incomes rose 0.3% MOM in December, according to the Bureau of Economic Analysis. Personal outlays (spending) rose 0.7%. The income number was in line with expectations, while spending was hotter than expected. The unexpected jump in spending makes sense given the better than expected GDP print yesterday.

The important number was the PCE Price Index, which is the inflation number that matters most to the Fed. The headline PCE Index rose 0.2% MOM as did the core rate, which excludes food and energy. Both of these were in line with expectations. On an annualized basis, the headline rate rose 2.6% YOY and the core rate rose 2.9% YOY. These were a touch below expectations, however the trends in annual inflation numbers continue to move lower.

The tame inflation numbers didn’t impact the Fed Funds futures all that much. We still see no change at the FOMC meeting next week, and March is still a toss-up.

Western Alliance reported earnings in line with estimates, however revenues were a bit light. Charge offs and provisions for loan losses increased, however it doesn’t appear that the carnage we are seeing in the commercial real estate space is hitting the bank balance sheets. Deposits grew, and WAL took advantage of it to pay down debt. The stock is down about a percent pre-open.

Mortgage origination volume was up 22% on a year-over-year basis to $10.1 billion. 90% of its origination business was purchase. Gain on sale margin expanded on a YOY basis to 30 bps. Don’t forget that mortgage rates were atrocious in October and early November, so the overall YOY growth in mortgage origination is encouraging for the mortgage business this year.

A good sign for the Spring Selling season: Pending home sales rose 8.3% in December, according to NAR. “The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices,” said Lawrence Yun, NAR chief economist. “Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.”

Filed under: Economy |

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22 Responses

  5. Brent Nyitray's avatar
    Brent Nyitray, on January 29, 2024 at 2:06 pm said:

    Your tax dollars at work. democrats bribing non-profits and their companion law firms with FERC money which will get recycled into campaign donations.

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  6. jnc4p's avatar
    jnc4p, on January 29, 2024 at 3:29 pm said:

    This will be an interesting case to see the discovery on:

    https://www.theatlantic.com/ideas/archive/2024/01/dei-lawsuit-penn-state/677268/

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  7. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on January 29, 2024 at 6:48 pm said:

    This is how we get reparations paid for, distribute the food from a DEI standpoint and the demographics least in need of a full ration of food sell it to the demographics that will most need it.

    https://x.com/willhild/status/1751989808111464601?s=46&t=vSGsUlnc4rLxcUf7zfUiHg

    Two birds, one stone!

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  8. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on January 29, 2024 at 6:56 pm said:

    This cannot be true – Trump was a madman in the Middle East and ALL correct thinking people think that from Jan 20, 2017 to Jan 20, 2021 was the most dangerous period for the Middle East!

    https://x.com/disclosetv/status/1752090071941910575?s=46&t=vSGsUlnc4rLxcUf7zfUiHg

    Embrace the fucking narrative, moron!

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  10. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on January 29, 2024 at 8:38 pm said:

    Suspect Speaker Pelosi’s future speaking opportunities will dry up for a while.

    https://acecomments.mu.nu/?post=408100

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  11. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on January 31, 2024 at 12:03 pm said:

    What Republican constituency is Rounds trying to reach here?

    <b>Sen. Mike Rounds (R-S.D.) indicated that Russia could be behind some of the messaging against the bill: “I suspect that a lot of theinternet rumors are very well coming from overseas, where they would love to see this shut down because some people would rather not see funding for Ukraine.”</b>

    https://www.politico.com/live-updates/2024/01/30/congress/can-border-deal-even-pass-the-senate-00138694

    I thought the idea of tying Ukraine money laundering , er, “funding” was to release the “funding” after adequate border enforcement had been established, not to codify open borders.

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  12. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on January 31, 2024 at 2:15 pm said:

    This will undoubtedly surprise you, the comments say it’s Russians all the way down.

    https://www.dailykos.com/stories/2024/1/30/2220407/-Texas-is-threatening-civil-war-So-why-isn-t-it-a-bigger-story

    My Gawd, to have the ability to occupy that mind space 24/7 since 2016.

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  13. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on January 31, 2024 at 2:55 pm said:

    Nancy Pelosi hardest hit.

    https://www.dailykos.com/stories/2024/1/29/2220300/-Nancy-Pelosi-says-she-is-being-harrassed-by-foreign-paid-hecklers

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