Weekly Outlook

Current Trend Direction: Sideways
Risks Favor: Neutral to Locking
Current Price of FNMA 6% Bond: $100.72

Thank you pilgrims and natives for creating the tradition we know as Thanksgiving. With a spread of turkey, stuffing, green bean casserole, rolls, sweet potatoes, cranberry dressing, ham and much more, only to be followed by a variety of pies ranging from pumpkin, banana cream and pecan, I dare to say it doesn't get much better. We have a spread of economic news on plate this week, with the Personal Consumption Expenditure Index (PCE) drawing the appetites of most. It has been noted in the past that the PCE is the Fed's favorite measure of inflation. It is one of the few reports that analysts are able to derive a comparison on the current status of inflation by taking month to month and year to year changes on a basket of good and/or services that typical consumers like to purchase. The PCI is deemed more relevant than the CPI due to the fact that it takes into account sales and substitutes when an item becomes overpriced. On a technical level, bonds are overbought and could factor in if inflation reports come in negative.

November 28 Durable Goods Orders Moderate
November 28 Consumer Confidence Moderate
November 28 Existing Home Sale Moderate
November 29 Gross Domestic Product Moderate
November 29 Chain Deflator Moderate
November 29 Home Sales HIGH
November 29 Crude Inventories Moderate
November 29 Beige Book Moderate
November 30 Chicago PMI HIGH
November 30 Personal Consumption Expenditures HIGH
November 30 Jobless Claims Moderate
November 30 Personal Income Moderate
November 30 Personal Spending Moderate
December 01 ISM Index HIGH

Weekly Outlook

Current Trend Direction: Countering Lower
Risks Favor: Locking
Current Price of FNMA 6.0% Bond: $100.34

The Jobs Report on Friday of last week came in much stronger than expected with revisions for August and September coming in upwards of 130,000 additional jobs created. More importantly, the unemployment rate fell to the lowest level in over five years at 4.4%. On a side note, Average Hourly Earnings came in higher than expected at $16.61. That amount is up on the year and is a solid indication of a tightening labor market. In turn, a tightening labor market usually makes its way back to the consumer due to 'wage-based inflation.' All that to say inflation doesn't look as contained as once suggested or believed. Thus, the question remains, will the Fed remain patient or will they raise interest rates the moment they have a chance. The good news is we have some time before the Fed meets again, and eventually things will become more clear cut as to which way they're leaning. Technically, bonds are a little overbought and could factor in on a negative trend that is created.

November 08 Crude Inventories Moderate
November 09 Jobless Claims Moderate
November 09 Balance of Trade Moderate
November 14 Core Producer Price Index (PPI) HIGH
November 14 Producer Price Index (PPI) Moderate
November 14 Retail Sales HIGH
November 14 Retail Sales ex-auto HIGH
November 15 Empire State Index Moderate
November 15 Crude Inventories Moderate
November 15 FOMC Minutes HIGH
November 16 Jobless Claims (Initial) Moderate
November 16 Capacity Utilization Moderate
November 16 Industrial Production Moderate
November 16 Philadelphia Fed Index HIGH
November 16 Consumer Price Index HIGH
November 16 Core Consumer Price Index (CPI) HIGH
November 17 Building Permits Moderate
November 17 Housing Permits Moderate
November 17 Consumer Sentiment Index (UoM) Moderate