This week is the release of Core CPI and PPI numbers for January. The only data release of note is the trade deficit and the usual unemployment reports for the prior week. The current trade deficit for the U.S. is operating precisely within expectations and correlating GDP numbers. This current week will provide further guidance for the Federal Reserve as the next release of inflation data is released.

U.S. Trade Deficit

The U.S. trade deficit rose slightly in December, but the annual gap still fell to the lowest level in three years and added to the economy’s strong performance in 2023.

Record deficits in 2021 and 2022, by contrast, acted as a big drag on gross domestic product, the official scorecard of the U.S. economy.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease by -0.04% with the current rate at 5.90%
• 30-Yr FRM rates saw a decrease by 0.01% with the current rate at 6.64%

MND Rate Index

• 30-Yr FHA rates are seeing a -0.05% decrease for this week. Current rates at 6.22%
• 30-Yr VA rates are seeing a -0.06% decrease for this week. Current rates at 6.24%

Jobless Claims

Initial Claims were reported to be 218,000 compared to the expected claims of 220,000. The prior week landed at 227,000.

What’s Ahead

Core CPI and Core PPI numbers are the primary reports being released this week. Given the Federal Reserve hesitation to move on any pending rate cuts, each release of inflation data that goes well, further adds conviction the Federal Reserve will soon be looking to cut rates after a satisfactory period.

The largest and most impactful financial data being released is as always the Federal Reserve rate decision. This time it fit well within the expectations across the broader market and lending partners, in that the Federal Reserve still remains to hold the current standing, and is showing push back on any potential rate cuts coming March when the next rate decision is planned. 

Most of the economic indicators from last year and this month have added fuel to the speculation that the Federal Reserve has largely met their goals and there is a strong upside pending rate cuts. 

The other rates of note are ISM manufacturing numbers, which have fallen in line showing growth at the start of the year. Consumer sentiment also has jumped to the highest levels in the last two and a half years.

Federal Rate Decision

Continuing to maintain current rates, the Federal Reserve has remarked that March is probably not the “base case” for when the Fed might start lowering its benchmark rate, Powell said during the press conference on Wednesday afternoon.

“Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time” for its first rate cut, he said. “But that’s to be seen.”

Consumer Sentiment

The numbers: Consumer sentiment shot up in January to the highest level since the summer of 2021, as Americans got some relief from waning inflation and saw an improved economy.

The final reading of the sentiment survey edged up to 79.0 from a preliminary 78.8 earlier in the month and from 69.7 in December, the University of Michigan said Friday. That is the highest mark since July 2021.

PMI / ISM Factory Index

A closely watched index that measures U.S. manufacturing activity rose to 49.1% in January from 47.1% in the prior month, according to the Institute for Supply Management on Thursday. That is the highest level since October.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease by -0.02% with the current rate at 5.94%
• 30-Yr FRM rates saw a decrease by -0.06% with the current rate at 6.63%

MND Rate Index

• 30-Yr FHA rates are seeing a -0.02% increase for this week. Current rates at 6.18%
• 30-Yr VA rates are seeing a -0.03% increase for this week. Current rates at 6.22%

Jobless Claims

Initial Claims were reported to be 224,000 compared to the expected claims of 214,000. The prior week landed at 215,000.

What’s Ahead

An extremely light week ahead after a Rate Decision from the Federal Reserve, with nothing of note except the usual unemployment numbers. The week after next week will be the first release of inflation numbers following the Consumer Price Index data.

It was an uneventful week for the data reports, as the majority of the interest waits for the Federal Reserve’s rate decision heading into the following week. One of the most notable reports is for New Home Sales, which had managed to greatly exceed the projections for the end of the year moving into January. It is an early sign that there is a surge in response to the week-to-week rate cuts we have been observing over the last two weeks.

The second largest data reports come from the PCE Index and preliminary projections for the Q1 GDP statistics. It is expected that the Federal Reserve’s decision to hold the current rate will hold true, but there is some optimism that a small rate cut may be a possibility.

Pending Home Sales

U.S. pending home sales shot up in December as falling mortgage rates brought buyers back into the market.

Pending home sales rose 8.3% in December from the previous month, according to the monthly index released Friday by the National Association of REALTORS®.

GDP (Prelim)

The U.S. grew at a robust 3.3% annual pace in the fourth quarter, showcasing the economy’s remarkable vigor despite high interest rates and still-elevated inflation. The Forecast of Growth was projected to be 2.0%.

Although growth slowed from the third-quarter’s surprising 4.9% clip, the back-to-back readings were the strongest since 2014, if the sharp recovery after the pandemic is set aside.

PCE Index

The rate of U.S. inflation — based on the Federal Reserve’s preferred PCE gauge — rose a mild 0.2% in December and pointed to smaller price increases in 2024.

Inflation picked up a bit at year end after declining in November, but there’s little evidence of emerging trouble. The increase in prices in the 12 months ended in December was unchanged at 2.6%.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing an increase by 0.20%, with the current rate at 5.96%
• 30-Yr FRM rates are seeing an increase by 0.09%, with the current rate at 6.69%

MND Rate Index

• 30-Yr FHA rates are seeing a 0.05% increase for this week. Current rates at 6.20%
• 30-Yr VA  rates are seeing a 0.08% increase for this week. Current rates at 6.25%

Jobless Claims

Initial Claims were reported to be 214,000 compared to the expected claims of 200,000. The prior week landed at 189,000.

What’s Ahead

All sights are set for the Federal Reserve’s rate decision coming next week. There are other notable reports alongside the rate decision including Non-farm Payroll statistics, Consumer Reports (Univ. Michigan), PMI numbers, and Shiller Price Home Index statistics, first reports of the year.