Morning Report: Inflation hits a 30 year high

Vital Statistics:

 LastChange
S&P futures4,663-16.2
Oil (WTI)84.220.33
10 year government bond yield 1.48%
30 year fixed rate mortgage 3.17%

Stocks are lower this morning after the inflation numbers came in hotter than expected. Bonds and MBS are down.

The Consumer Price Index rose 0.9% MOM and 6.2% on an annual basis. Ex-food and energy, it rose 4.6%. This was the highest reading in 30 years. Energy prices drove the month-over-month increase, but we are seeing increases across the board. Aside from energy, meat / poultry / fish and used cars were up big.

Mortgage Applications rose 5.5% last week as purchases rose 3% and refis rose 7%. “Although overall activity remains close to January 2020 lows, homeowners acted on the decrease in rates,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Refinance activity was up 7 percent overall, with gains in both conventional and government refinances. Additionally, the average loan balance for a refinance application was the highest in a month.”

Initial Jobless Claims came in at 267k last week. We are still pretty elevated compared to pre-pandemic numbers.

United Wholesale reported third quarter numbers yesterday. Originations rose 16% YOY and 6% QOQ to $63 billion. Gain on sale margins came in at 94 basis points, an improvement from the 81 bps in Q2 but much lower than the 318 from a year ago. For the fourth quarter, they are guiding for gain on sale margins to come in between 85 and 105 basis points and for production to fall by around 11%.

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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