Vital Statistics:
| Last | Change | |
| S&P futures | 4,394 | 39.2 |
| Oil (WTI) | 80.82 | 0.39 |
| 10 year government bond yield | 1.54% | |
| 30 year fixed rate mortgage | 3.20% |
Stocks are higher this morning as earnings season begins in earnest. Bonds and MBS are up.
The FOMC minutes pretty much confirmed what we already knew – that that the Fed will begin its tapering process shortly – either at the November or December meeting.
In the discussion of the economy, the job market and inflation seem to have differing views. The Fed participants thought that employment would continue to accelerate, and that the labor force participation rate would increase. So far, that is not happening. The Fed is not sure why this is happening, but it offered explanations like COVID resurgence, school and childcare.
On the inflation front, there is some concern that the identifiable COVID bottlenecks are translating into higher inflationary expectations, although the consensus seems to be that inflation will moderate back to 2% or so once these bottlenecks have worked out.
Overall, the explanation for the worker shortage seems to be largely boilerplate, and it seems unsatisfying. The Great Resignation seems to be something different, and so far no one seems to have a good explanation for it. Much of it is falling down ideological lines.
Initial Jobless Claims fell to 293,000 last week. We are still elevated, however we are well above pre-COVID levels.
Inflation at the wholesale level came in below expectations, however the numbers are still pretty high. The producer price index rose 0.5% MOM and 8.6% YOY. Ex-food and energy, it rose 0.2% MOM and 6.8% YOY.
The Daily Tearsheet 