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re: PPI again shows signs of cooling
Posted on 8/13/24 at 7:53 pm to SDVTiger
Posted on 8/13/24 at 7:53 pm to SDVTiger
quote:
Core PPI, which strips out food and energy prices
I’m no economist but I never understood this. Food is such a huge cost to people. They do the same thing with the CPI too.
This post was edited on 8/13/24 at 7:54 pm
2
Posted on 8/13/24 at 7:58 pm to kung fu kenny
quote:
I’m no economist but I never understood this. Food is such a huge cost to people. They do the same thing with the CPI too.
It’s because they’re volatile commodities and not typically impacted by fiscal policy, at least not in a traditional sense.
The idea is that core inflation will be better for planning, and I tend to agree with that idea.
Posted on 8/14/24 at 7:25 am to SDVTiger
Was just watching an economist talking about the July PPI report. It seems the drop was due primarily to producers sacrificing margins (taking less net profit). Had they been at normal profit margins, PPI would have come in around 4%.
If this is true, we'll see it in future PPI reports as producers can't afford to sacrifice profits as the economy slows.
If this is true, we'll see it in future PPI reports as producers can't afford to sacrifice profits as the economy slows.
Posted on 8/14/24 at 7:45 am to Bard
CPI down to 2.9% from 3.0% YoY (really only .05% decrease when looking at more sig figs 2.97 to 2.92)
Core CPI down to 3.2% from 3.3% YoY (3.27 to 3.21)
Core CPI down to 3.2% from 3.3% YoY (3.27 to 3.21)
Posted on 8/14/24 at 7:49 am to BottomlandBrew
Cuts incoming 
Posted on 8/14/24 at 7:53 am to SDVTiger
Markets now have .25% cut as the most likely for September.
You’re in the mortgage market, right? I just don’t see the 10y getting much lower from here, so maybe you get comfortably into the 5s on mortgages, but a 4 handle seems like a pipe dream without a substantial recession.
You’re in the mortgage market, right? I just don’t see the 10y getting much lower from here, so maybe you get comfortably into the 5s on mortgages, but a 4 handle seems like a pipe dream without a substantial recession.
Posted on 8/14/24 at 8:08 am to slackster
quote:
You’re in the mortgage market, right?
No
quote:
just don’t see the 10y getting much lower
3.2 is what i predict
quote:
5s on mortgages
So back to pre covid rates and a healthy rate environment. And rates are already in the 5s for mortgages. if your prediction comes true then we will have higher 4s available
Posted on 8/14/24 at 8:20 am to slackster
There will be low 5s/high 4s in a year or so.
I’m planning on refinancing into a 15year if those ever get below 4.5
I’m planning on refinancing into a 15year if those ever get below 4.5
Posted on 8/14/24 at 8:33 am to SDVTiger
NM, was thinking you were talking about 30yr mortgage. 
This post was edited on 8/14/24 at 8:35 am
Posted on 8/14/24 at 8:40 am to BottomlandBrew
quote:
CPI down to 2.9% from 3.0% YoY (really only .05% decrease when looking at more sig figs 2.97 to 2.92) Core CPI down to 3.2% from 3.3% YoY (3.27 to 3.21)
It's enough, barely (and that's really been the underlying story with all this, how incredibly sticky and stubborn the inflation rate has been in the face of rates being this high for this long).
If it drops any more at all, we get .25 in September. If it goes back up, we may get a .25 cut but it will depend on other data (jobless claims, f/t UE numbers, etc). We won't see anything more than a .25 cut in September unless August comes in with a ridiculous drop (something like .5 or more).
Posted on 8/14/24 at 9:58 am to SDVTiger
quote:
Year-over-year, Core PPI increased 0.6% to 2.4%, which was lower than estimates of 2.7%.
And month over month over month the Core PPI has increased. May 0.0 June -.01 July .02
Posted on 8/14/24 at 2:13 pm to Hateradedrink
quote:
There will be low 5s/high 4s in a year or so. I’m planning on refinancing into a 15year if those ever get below 4.5
4s just seem wishful thinking with what we know right now. That being said, predicting interest rates with any accuracy is a fools errand.
Posted on 8/14/24 at 2:16 pm to slackster
quote:
It’s because they’re volatile commodities and not typically impacted by fiscal policy, at least not in a traditional sense. The idea is that core inflation will be better for planning, and I tend to agree with that idea.
That makes sense. But the govt shouldn’t tout these numbers then and act like inflation isn’t affecting everyone’s purchasing power. That’s not apples to apples
Posted on 8/14/24 at 2:52 pm to kung fu kenny
quote:
kung fu kenn
What you and so many others miss every single time is the fact that stripping away food and energy has been making the inflation number HIGHER, not lower.
It’s fricking nuts how often people on td try to make this point when they don’t even know what they’re reading.
Posted on 8/14/24 at 4:40 pm to slackster
quote:
4s just seem wishful thinking with what we know right now
Not really when the rates that bank rate or whoever you look at has a 2% comp built into the pricing that you are shown
So if the news says rates are at high 5s, then 4s are readily available
Posted on 8/14/24 at 5:29 pm to SDVTiger
quote:
Not really when the rates that bank rate or whoever you look at has a 2% comp built into the pricing that you are shown
Bingo. The spread right now is at a local historical high. The spread isn’t normally this high.
Cut rates and get the spread to historical norms, and you have high 4s
Posted on 8/14/24 at 7:06 pm to Hateradedrink
quote:
Cut rates and get the spread to historical norms, and you have high 4s
The Fed doesn’t directly influence the 10y treasury, which is what dictates most mortgage rates. Given the debt load of this country, it’s reasonable to expect buyers to be wary of locking in sub 3.5% on US debt for 10y.
As far as spreads, they’re not exactly blown out. They’re not too far off historical numbers when the Fed isn’t buying MBS.
Posted on 8/15/24 at 7:14 am to slackster
quote:
The Fed doesn’t directly influence the 10y treasury, which is what dictates most mortgage rates.
This statement is true and a meme at the same time.
It doesn’t directly influence the 10y, but there is a correlation over time.
This post was edited on 8/15/24 at 7:15 am
Posted on 8/15/24 at 7:35 am to JohnnyKilroy
How? Food prices have doubled in the past few years.
Posted on 8/15/24 at 8:05 am to Hateradedrink
quote:
It doesn’t directly influence the 10y, but there is a correlation over time.
Kinda.
One interesting fact is that a large chunk of 10y rate drops have preceded the first Fed rate cut. That’s been true this cycle too - 10y has already fallen 105bps from the high around 5%, and FFR hasn’t changed a bit over that time.
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