The Consumer Price Index (CPI) is showing higher than expected inflation, and the Producer Price Index (PPI) is showing lower than expected inflation. The two are in conflict with each other; however, the Consumer Price Index is still the far greater indicator for inflation as it directly impacts the cost of living for everyone, not just production assets.
Given the Federal Reserve’s recent speeches it would seem that there is very likely to be a delay in the rate cuts this upcoming quarter. They have stated numerous times they are driven largely by data and that data has proven that inflation is still not as quite under control as they had anticipated moving into Quarter 2. Lending partners have been responding in kind to the news as they have had strong rate increases across the board for the previous week.
Producer Price Index
The producer price index is more volatile than a similar survey of consumer prices, but it’s not pointing to a broad acceleration in U.S. inflation. To be sure, the PPI has moved higher in early 2024. The yearly rate of wholesale inflation climbed to an 11-month high of 2.1% in March from 1.6% in the prior month.
Consumer Price Index
The cost of consumer goods and services rose a sharp 0.4% in March, capping off a third straight month of elevated inflation readings that will make it hard for the Federal Reserve to cut interest rates soon. The increase in the consumer price index last month exceeded the 0.3% forecast of economists.
Primary Mortgage Market Survey Index
• 15-Yr FRM rates are seeing an increase by 0.10% with the current rate at 6.16%
• 30-Yr FRM rates are seeing an increase by 0.06% with the current rate at 6.88%
MND Rate Index
• 30-Yr FHA rates are seeing a 0.25% increase for this week. Current rates at 6.70%
• 30-Yr VA rates are seeing a 0.26% increase for this week. Current rates at 6.72%
Jobless Claims
Initial Claims were reported to be 211,000 compared to the expected claims of 217,000. The prior week landed at 222,000.
What’s Ahead
The Beige Book report is the only impactful release next week. We should see a relatively calm week, as the weeks following inflation data reports often have a less-filled schedule. This upcoming week should feature the usual weekly reports in jobs data.