The week ahead will be dominated by the personal incomes and outlays report on Wednesday which contains the all-important PCE Price Index. We will also get new home sales, home price indices, the second estimate for Q2 GDP and consumer sentiment. The Fed’s Jackson Hole meeting is this week, with Kevin Warsh speaking on Friday. Nvidia reports earnings on Wednesday.
Business activity accelerated in August to the fastest pace since 2022. Services accelerated while manufacturing declined. Job growth was the fastest in almost two years, while pricing pressures moderated. Expectations rose as well.
“US business is booming, with firms reporting the fastest output growth for over four years so far in the third quarter as the expansion picked up further momentum in August. The survey data for the third quarter are currently pointing to annualized growth approaching 3.0%, up solidly from the 1.5% pace seen in the second quarter.
Jobs growth has also shown a welcome revival in August, with employers gaining in confidence as concerns fade over the negative economic impacts of tariffs and the conflict in the Middle East. However, the latter in particular remains a key area of concern for businesses, especially via the impact on supply lines and energy prices. Supply delays were again reported in August to one of the greatest extents seen over the past four years, clearly constraining output in many companies. Price pressures, while fading, also remain elevated and prone to renewed upward pressures should energy prices rise again.”
Treasury Secretary Scott Bessent could target nearly $1 trillion in the Treasury General Fund to put towards bond buybacks. Two senior officials mentioned the possibility, however they didn’t indicate this was a plan. Certainly the amount in the fund (which is intended to fund government operations) is much larger than the $2 – $4 billion Treasury intends to use for buybacks.
As it currently stands, Treasury will probably fund the long bond buybacks by issuing shorter-dated paper – a replay of Operation Twist from the Great Recession days.
More M&A in the mortgage business: NEXA is acquiring UMortgage. NEXA is a broker that did $14 billion in volume while UMortgage is a banker that did about $2 billion.
