Thunderstruck! Mortgage Applications Decreased -10.8% WoW (Interest Rates Bear Steepening With Trump’s Election!)

Thunderstruck! The election of Donald Trump has rocked markets. But not mortgage applications … yet.

WASHINGTON, D.C. (November 6, 2024) — Mortgage applications decreased 10.8 percent from one week earlier, according to data fro m the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending November 1, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 10.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 12 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 2 percent higher than the same week one year ago.

The Refinance Index decreased 19 percent from the previous week and was 48 percent higher than the same week one year ago.

“Ten-year Treasury rates remain volatile and continue to put upward pressure on mortgage rates. The 30-year fixed rate last week increased to 6.81 percent, the highest level since July,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications decreased for the sixth consecutive week, with purchase activity falling to its lowest level since mid-August and refinance activity declining to the lowest level since May. The average loan size on a refinance application dropped below $300,000, as borrowers with larger loans tend to be more sensitive to any given changes in mortgage rates.”

The refinance share of mortgage activity decreased to 39.9 percent of total applications from 43.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.0 percent of total applications.

The FHA share of total applications decreased to 15.5 percent from 16.4 percent the week prior. The VA share of total applications decreased to 12.5 percent from 14.6 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.81 percent from 6.73 percent, with points decreasing to 0.68 from 0.69 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) increased to 6.98 percent from 6.77 percent, with points increasing to 0.65 from 0.49 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.75 percent from 6.55 percent, with points decreasing to 0.87 from 0.94 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.21 percent from 6.27 percent, with points decreasing to 0.55 from 0.77 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 6.05 percent from 6.20 percent, with points increasing to 0.84 from 0.59 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The bond market is reacting to the election of Trump with a clear Bear Steepening.

Bear steepening happens when yields move up across tenors, but long-end yields move up even faster than short-end yields.

This isn’t going to help mortgage applications due to lowering rates.

Mortgage Applications Decline -0.1% WoW Due To Declining Mortgage Refis

Mortgage applications were essentially flat last week as rates increased for the fourth time in five weeks, driven by bond market volatility in advance of the presidential election and the next FOMC meeting. The 30-year fixed rate, at 6.73 percent, was at its highest level since July 2024.

WASHINGTON, D.C. (October 30, 2024) — Mortgage applications decreased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 25, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 10 percent higher than the same week one year ago.

The Refinance Index decreased 6 percent from the previous week and was 84 percent higher than the same week one year ago.

Tower Of Power? US Industries Are Buckling Under Pressure of Surging Electricity Costs (Industrial Electricity Costs UP 24.4% YoY)

The US is the expensive tower of power … but it should be cheap. Getting rid of coal power was idiotic and The Left’s fear of nuclear power is laughable.

EIA data by user classification, chart by Mish.

Rising energy bills have forced companies to scale back industrial operations, threatening a greater drag on the economy.

As of May, electrical energy costs are up 24.4 percent from a year ago. Producer Price Index (PPI) data suggests things are getting worse.

Please consider US Industrial Complex Is Starting to Buckle From High Power Costs

Europe’s fertilizer plants, steel mills, and chemical manufacturers were the first to succumb. Massive paper mills, soybean processors, and electronics factories in Asia went dark. Now soaring natural gas and electricity prices are starting to hit the US industrial complex.

On June 22, 600 workers at the second-largest aluminum mill in America, accounting for 20% of US supply, learned they were losing their jobs because the plant can’t afford an electricity tab that’s tripled in a matter of months. Century Aluminum Co. says it’ll idle the Hawesville, Kentucky, mill for as long as a year, taking out the biggest of its three US sites. A shutdown like this can take a month as workers carefully swirl the molten metal into storage so it doesn’t solidify in pipes and vessels and turn the entire facility into a useless brick. Restarting takes another six to nine months. For this reason, owners don’t halt operations unless they’ve exhausted all other options.

At least two steel mills have begun suspending some operations to cut energy costs, according to one industry executive, who asked not to be identified because the information isn’t public. In May, a group of factories across the US Midwest warned federal energy regulators that some were on the verge of closing for the summer or longer because of what they described as “unjust and unreasonable” electricity costs. They asked to be wholly absolved of some power fees—a request that, if granted, would be unprecedented.

Michael Harris, whose firm Unified Energy Services LLC buys fuel for industrial clients, says costs have risen so high that some are having to put millions of dollars of credit on the line to secure power and gas contracts. “That can be devastating for a corporation,’’ he says. “I don’t see any scenario, absent explosions at US LNG facilities’’ that trap supplies at home, in which gas prices are headed lower in the long term.

EIA Average Electricity Cost Cents

EIA Cost Data January 2021 vs May 2022

Residential: 12.69 to 14.92
Commercial: 10.31 to 12.14
Industrial: 6.39 to 8.35
Transportation: 9.61 to 10.79
All: 10.36 to 12.09

Those prices are through May 2022. Much electrical energy comes from natural gas.

US Natural Gas Futures

US gas prices fluctuated wildly in June and July. I suspect the average price is 7.33 or so for both months. Things are decidedly worse in Europe.

EU Natural Gas Price

From 25 or even 50 to 200 is one hell of a leap. It’s somewhere between 300% and 700% depending on your starting point vs 100% or so for the US.

Let’s now check the latest PPI data for a look at where things are and more importantly headed.

PPI Electrical Power Index 2020-Present

From pre-pandemic to January of 2021, the PPI electrical power index was flat. It has since surged on a relatively steady pace.

From May to July the index went from 231 to 238. That tacks on another three percentage points since the EIA report.

PPI Electrical Power Index 1991-Present

Long Term Trend

The long-term trend does not exactly look pretty.

And as Bloomberg noted, Century Aluminum Co. says it’ll idle the Hawesville, Kentucky, mill for as long as a year, taking out the biggest of its three US sites.

Reflections on Beer

Regarding the price of aluminum, please note America’s Beer CEOs Have Had It With the Trump-Era Aluminum Tariffs

The beer industry uses more than 41 billion aluminum cans annually, according to a Beer Institute letter to the White House dated July 1.

“These tariffs reverberate throughout the supply chain, raising production costs for aluminum end-users and ultimately impacting consumer prices,” according to the letter signed by the CEOs of Anheuser-Busch, Molson Coors, Constellation Brands Inc.’s beer division, and Heineken USA.

This letter to the president comes amid the worst inflation in more than 40 years and just months after aluminum touched a multi-decade high. Prices for the metal have since eased significantly.

Whatever victory beer makers and drinkers may have with aluminum prices may not last with US aluminum plants shutting down.

Then again, the cure for everything is likely to be a huge recession.

Zero Consumer Inflation

I am pleased to report there was no consumer inflation in July.

For discussion, please consider CPI Month-Over-Month Was Unchanged, Year-Over-Year Up 8.5 Percent

The CPI report resulted in a nonsensical Twitter debate on the meaning of zero. For the record, assuming you believe the numbers, there was indeed zero inflation month-over-month.

The accurate rebuttal is: One month? So what?

Moreover, zero is not as good as it looks. All of it was due to a 7.7 percent decline in the price of gasoline. And year-over-year inflation was a hot 8.5 percent.

Meanwhile, rent and food keep rising and the price of rent will be sticky. Gasoline is more dependent on recession and global supply chains.

Food Prices Rise Most Since February 1979

For more on the price of food, please see Food at Home is Up 13.1 Percent From a Year Ago, Most Since February 1979

For more on rent, please note Tennant’s Unions Demand Biden Declare a National Emergency to Stop Rent Gouging

For more on producer prices please see Producer Prices Decline For the First Time Since the Pandemic Due to Energy

Although energy declined, electricity didn’t.

Spotlight on Fed Silliness

The above reports and this one industrial costs puts a spotlight on the silliness of the Fed’s focus on consumer inflation as if that’s all that matters.

The Fed has blown three consecutive bubbles trying to produce two percent consumer inflation while openly promoting raging bubbles in assets and missing the boat entirely on industrial matters.

Cottage Cheese? Mortgage Applications Down 17% Since Last Week, Purchase Applications Down -60% Under Biden/Harris (Housing Prices Up 34.2% Under Biden/Harris While Mortgage Rates Up 138.6%)

I would like to see Kamala Harris explain why mortgage purchase applications are down -60% under Biden/Harris Presidency. Other than a word salad answer. Or Cottage Cheese.

Mortgage applications decreased 17.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 11, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 17.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 17 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 7 percent higher than the same week one year ago.

The Refinance Index decreased 26 percent from the previous week and was 111 percent higher than the same week one year ago.

Housing prices are up 34.2% under Biden/Harris while mortgage rates are up 138.6%.

US Jobs Surge! BIG Fed Policy Error Or Gov’t Election Manipiulation? (785,000 Gov’t Workers Added In September)

It turns out that Powell’s “emergency” 50bps rate cut was – drumroll – another major policy mistake by the Fed. Or it is Presidential election interference by The Biden/Harris Administration giving Cacklin’ Kamala as talking point?

Moments ago, the BLS reported that at a time when prevailing consensus was for jobs to continue their recent downward slide sparked by the near-record annual jobs revision and several months of downbeat jobs reports, in September the US unexpectedly added a whopping 254K jobs, the biggest monthly increase since March…

… and above the highest estimate (which as noted last night was from Jefferies at 220K). In fact, the number was a 4-sigma beat to the median estimate!

There’s more: unlike previous months where we saw repeat downward job revisions, the BLS said that both prior months were revised up, to wit: the change in total nonfarm payroll employment for July was revised up by 55,000, from +89,000 to +144,000, and the change for August was revised up by 17,000, from +142,000 to +159,000. With these revisions, employment in July and August combined is 72,000 higher than previously reported.

Some context: as UBS notes, the moving six-month average on nonfarm payrolls is 167k. The estimate is that 150k is about consistent with a return of the economy to trend growth. Which means that inflation is about to come back with a vengeance, just as the Fed launches its easing cycle.

Remarkably, while payrolls jumped by the most in half a year, the number of employed people also surged, rising by a whopping 430K, also the biggest one-month jump since March.

It wasn’t just the payrolls, however, which came in far stronger than estimates: the unemployment rate also came in stronger than expected, and thanks to the jump in employed workers coupled with the decline in unemployed workers (from 7.115MM to 6.834MM), it dropped from 4.2% to 4.1% (and down from 4.3% two months ago which spared the entire recession panic).

Among the major worker groups, the unemployment rate for adult men (3.7 percent) decreased in September. The jobless rates for adult women (3.6 percent), teenagers (14.3 percent), Whites (3.6 percent), Blacks (5.7 percent), Asians (4.1 percent), and Hispanics (5.1 percent) showed little or no change over the month.

And here is the rub, because in a vacuum the super strong jobs numbers would have been fantastic, the only issue is that the September blowout comes as the Fed launches an easing cycle and as wages are once again rising as we have warned for the past 3 months. Indeed, in September, the average hourly earnings rose 0.4% sequentially, beating the estimate of 0.3%, while on an annual basis, wage growth was 4.0%, up from an upward revised 3.9% and beating the 3.8% estimate.

One note here: the average workweek for all employees edged down by 0.1 hour to 34.2 hours in September, which means the hourly earnings increase is not “pure” but rather a function of denominator adjustments. In manufacturing, the average workweek was unchanged at 40.0 hours, and overtime edged down by 0.1 hour to 2.9 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.7 hours.

What sector had the biggest growth? UNPRODUCTIVE government workers! A record 785,000 government workers were added in September, pushing total govt workers also to a new record high.

The Biden/Harris Administration has given away billions of dollars to foreign nations (like Ukraine) and illegal immigrants so far this year,

– $24,400,000,000 to Ukraine.

– $11,300,000,000 to Israel.

– $1,950,000,000 to Ethiopia.

– $1,600,000,000 to Jordan.

– $1,400,000,000 to Egypt.

– $1,100,000,000 to Afghanistan.

– $1,100,000,000 to Somalia.

– $1,000,000,000 to Yemen.

– $987,000,000 to Congo.

– $896,000,000 to Syria.

– $9,000 per illegal immigrant that has entered the U.S.

And claim that FEMA has no money left for Hurricane Helene victims who have received only $750 per person. So I have plenty of reasons to have no trust or confidence in the Biden/Harris Mal-administration.

US Dollar Eroded-20% Under Biden/Harris Ring Of Fire (Federal Reserve Was Co-conspirator In Rampant Inflation)

The US has fallen into a Ring of Fire under Biden/Harris horrid economic policiies.

But Biden/Harris had help from their deep state partner, The Federal Reserve.

The purchasung power of the US dollar has fallen by a whopping -20% under Biden/Harris. No wonder Harris is afraid to talk to reporters about her plans.

The children in Congress went on a spending spree as a result of COVID resulting in record inflation.

The deep state’s financing arm, The Federal Reserve, certainly helped create inflation by ramping up M2 Money supply around Covid.

Of course, children in Congress and Harris/Walz will use ANY excuse to tax and spend (and borrow/spend). The most recent inflation report had CPI growng at 2.5% YoY resulting in a further decline of purchasing power of the US dollar of -2.5% YoY.

Harris/Walz fully intend to keep shoveling TRILLIONS into green energy transformation and supporting illegal immigrants.

Hot, Hot, Hot! Core Inflation Comes In Hotter Than Expected (50 BPS Rate Cut Likely Off The Table)

Feelin’ hot, hot, hot! Inlfation that is.

Following last month’s modest miss in CPI which sparked speculation about a 50bps cut, which was then boosted by the jobs report miss and the huge downward revision, moments ago the BLS reported that – as only a handful of Wall Street strategists warned – CPI actually came in hotter than expected at the core level, rising 0.3% MoM vs expectations of a 0.2% print, with all remaining metrics coming in line, to wit:

CPI 0.2% MoM (or 0.187% unrounded), Exp. 0.2% – in line
CPI Core 0.3% MoM (or 0.281% unrounded), Exp. 0.2% – hotter than expected
CPI 2.5% YoY, Exp. 2.5% – in line
CPI Core 3.2% YoY, Exp. 3.2% – in line

And visually, here is the headline print, where the annual CPI increase dropped to just 2.5% from 2.9%, the lowest since February 2021…

.. and the core….

…. as goods deflation is stalling and may even print positive in the coming months, while core service inflation remains the biggest driver.

That was s the 51st straight month of MoM increases in Core CPI, and a new record high.

Under the hood, used car prices fell 1.0%, moderating from last month’s 2.3% drop, while airline fares jumped 3.9%, a big reversal to last month’s bizarre -1.2% drop. Car insurance costs jumped another 0.6%, after rising 1.2%; furniture prices dropped 0.3% reversing last month’s 0.3% rise.

Perhaps more worrying is the fact that while rent inflation has flatlined, shelter inflation posted its first increase since early 2023!

August Shelter inflation up 0.43% MoM and up 5.23% YoY vs 5.05% in July
August Rent Inflation up 0.39% MoM and up 4.97% YoY vs 5.09% in July

And the first monthly increase since March 2023 highlighted:

Last, but not least, and perhaps most ominous of all, is that while inflation refuses to be “killed” even as the Fed is about to start cutting rates, Supercore CPI rose 0.33% MoM, the biggest monthly increase since April, driven by continued acceleration in transportation services, which jumped the most in 5 months.

Finally, money supply growth is reaccelerating…

Which begs the question: how long until the Fed’s next easing cycle unleashes the Arthur Burns fed:

Putting it all together:

Underlying inflation unexpectedly picked up, as core CPI increased 0.3% from July, the most in four months, and 3.2% from a year ago
Only five of the 65 forecasts in Bloomberg’s survey called for a 0.3% increase in the core CPI. Almost everyone else was at 0.2%, and four had it at 0.1%. The five were right.
Shelter prices, the largest category within services, climbed 0.5%, the most since the start of the year and the second month of acceleration, defying widespread expectations for a downshift. Owners’ equivalent rent — a subset of shelter and the biggest individual component of the CPI — rose at a similar pace.
Airfares rose a hefty 3.9% in August after falling for the previous five months while costs for energy and used vehicles fell
Risk assets pumped and dumped and bond yields rose. S&P 500 futures dropped steeply immediately after the report came out, before paring losses. The yield on 10-year Treasuries advanced two basis points to 3.66%. The dollar wavered.

And while one can stick a fork in the market’s hopes for a 50bps rate cut (odds slumped from 30% to 20%… and from 50% last Friday)…

… the question remains: will the Fed really cut rates as shelter inflation inflects higher for the first time since 2023.

After last night’s ABC Presidential debate. Where Kamala acted like she was auditioning for part in the movie “Mean Girls” and the ABS moderators acted like pure Soviet-era Russian journalists.

What the Short-Term Treasury Market Says about Rate Cuts (Powell Says the US Really Needs to Fix the Unsustainable Deficit)

Goodbye cruel world!

Thursday, when the CPI report was released with a month-to-month reading of -0.056% (rounded to -0.1%), the six-month Treasury yield dropped by 8 basis points, and on Friday by another 2 basis points, to 5.23%. That combined 10-basis-point drop was a significant and visible 2-day move.

It brought the 6-month yield just a tad below the lower end of the Fed’s target range for the federal funds rate (5.25-5.50%), and below the effective federal funds rate (EFFR), currently 5.33% (blue in the chart below):

So the 6-month yield is now pricing in one rate cut within its 6-month window, more heavily weighted toward the first two-thirds or so of that window, after having already wrongly done so at the beginning of this year.

Back in late November through January, the 6-month yield had also priced in a rate cut within its 6-month window. By February 1, the yield had dropped to 5.15%, a sign the market was certain that there would be a rate cut at the March FOMC meeting.

But the market was wrong. Instead, we got a series of ugly inflation readings for January, February, March, and April, and there still hasn’t been a rate cut.

By March and April, with ugly inflation readings accumulating, rate cuts within the 6-month window of the 6-month yield were taken off the table.

May had provided a much softer inflation reading. And with Thursday’s CPI report of June, a rate cut within the 6-month window of the 6-month yield, weighted toward the first two-thirds of the window, was back on the table.

But the shorter-term Treasury yields are not pricing in a rate cut within their shorter windows. The shorter yields didn’t move much since the CPI report, and all were near the upper end of the Fed’s policy rates (5.5%), and all were above the EFFR (5.33%):

1-month yield: +1 basis point to 5.47%
2-month yield: +2 basis points 5.52%
3-month yield: -3 basis points to 5.43%
4-month yield: -5 basis points to 5.41%

In other words, the Treasury market is not expecting a rate cut in July at all, but sees a good chance of a rate cut in September, not as strong a chance as they saw in late January, when they saw a rate cut with near certainty by March that never came.

The three-month yield is not seeing any rate cuts within the first two-thirds of its window. No rate cut in July, and the September 18 FOMC meeting statement is beyond the first two-thirds of the window and has less impact on the current three-month yield:

The market for the 2-year yield has been wrong all along.

The 2-year Treasury yield demonstrates how wrong the Treasury market has been all along about the Fed’s rate hikes and rate cuts: it expected far fewer and smaller rate hikes than what the Fed eventually did. And then without ever rising to the level that would price in the actual rates that the Fed has held for nearly a year, it started pricing in rate cuts before the Fed even stopped hiking rates.

So back in April 2022, the two-year yield was about 2.5%. Now, today, 2.5% sounds like a lousy yield, but back then – after 15 years of near-0% interrupted by a few years of higher yields that maxed out at around 2.4% in 2019 – 2.5% sounded pretty good, and the market thought that was getting pretty close to the Fed’s terminal rate.

In February 2022, before the Fed’s rate hikes started, Goldman Sachs predicted that the Fed would hike seven times in 2022, each by 25 basis points, and then in 2023 three times by 25 basis points each, one hike per quarter, to reach a terminal target range for the federal funds rate of 2.5-2.75% by Q3 2023.

The Fed ended up doing more double that, and by July 2023.

So the 2-year Treasury note that sold at auction in April 2022 with a coupon of 2.5% and with a yield close to that sounded like a good deal, and we, being part of the Treasury market, nibbled on some too. Two years was as long as we went. The rest of our Treasuries are T-bills.

Those 2-year notes matured in April 2024, and we got paid face value, and we earned about 2.5% in interest each year over those two years. The entire market was wrong – and so were we. The Fed would raise to 5.25-5.5% by July 2023, more than double the yield we received, and its rate is still there, and the yields of our two- three- and four-month T-bills have by far outrun our 2-year note.

The 2-year yield closed at 4.45% on Friday. The market never once came even close to betting that the Fed would hold rates above 5% for long, and they’ve been above 5% for over 14 months. And the 2-year yield has been below the EFFR for almost the entire time since January 2023, having turned into the Doubting Thomas.

The market was wrong about the Fed’s rates, and all 2-year notes that were bought at auction and that matured in 2024 or will mature in 2024 were a lousy deal. Buyers would have been better off with a series of short-term T-bills that stick closely to Fed’s actual policy rate — rather than follow market projections.

Someday, the market is going to get the rate-cut bets right. But it will only take a few more lousy inflation readings for the rate cuts to get moved further into the future. On Friday, the PPI showed up with red-hot services inflation, now delineating a clear U-Turn in December. Producers that pay those higher prices for services will try to pass them on, and so they may ultimately filter into consumer prices and higher inflation readings over the next few months. Or if producers cannot pass on the higher costs of services, their margins will get squeezed.

Inflation is unpredictable. Once inflation has broken out in a big way, as history shows us, it tends to come in waves and tends to dish up nasty surprises. And it already has dished up nasty surprises multiple times so far, including each of the first four months of this year.

Powell Says the US Really Needs to Fix the Unsustainable Deficit

Going Down! US Producer Prices Rise At Fastest Pace In 15 Months As Services Costs Soar (Buying Conditions For Housing Hit All-time Low!)

We’re going down!

After May’s MoM deflationary impulse (thanks to a plunge in energy costs), June was expected to see a modest 0.1% rise (and we have seen energy prices starting to rise again). Sure enough, headline PPI printed HOT at +0.2% MoM (and May was revised higher), pushing the YoY print up to 2.6% (well above the 2.3% expected)…

Source: Bloomberg

That is the highest PPI since March 2023.

Core PPI rose by 0.4% MoM (double the 0.2% exp), sending the YoY price rise up by 3.0% (also the hottest since March 2023)…

Source: Bloomberg

The jump in PPI was driven by a resurgence in Services costs as Energy remains deflationary (for now)…

Source: Bloomberg

The June rise in the index for final demand can be traced to a 0.6-percent increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.5 percent

Perhaps worse still, the pipeline for PPI (intermediate demand) is accelerating…

Source: Bloomberg

On the housing side, buying conditions for housing tanks to all-time low.

Inflation Slows To 3.0%, But Shelter Still Rising At 5.2%, Electricity Up 4.4% (Core Prices Continue To Rise And Have Never Been Higher)

Are you ready? You can tell an election is on the radar since inflation numbers are settling down for the most part. According to the BLS, overall inflation fell slightly in June to 3.0%.

Shelter CPI is up 5.14% YoY as M2 Money growth has been rising slowly … again.

Core CPI also ‘missed’, rising just 0.1% MoM (vs +0.2% exp), dragging the YoY Core CPI down to +3.27% – its lowest since April 2021…

Source: Bloomberg

Goods deflation also dominates core prices disinflationary trend…

We do note that Core consumer prices have still not seen a single monthly decline since Bidenomics began.

Core consumer prices are up just under 18% since Bidenomics began (+4.9% per annum) – that is dramatically higher than the 2.0% per annum Americans experienced under Trump…

Core consumer prices have never been higher.

The much-watched SuperCore CPI rose on a MoM basis but declined (back below 5.0%) on a YoY basis (but obviously remains extremely elevated)…

Source: Bloomberg

Transportation Services are seeing prices fall…

Finally, we can’t help but get a sense of deja vu all over again here. What if… The Fed cuts (because bad – recession – data), Biden loses (because dementia), and inflation re-accelerates (just like in the 80s)…