Mortgage bonds and stocks are higher to start the day.
Fed comments
Patrick Harker, Philadelphia Fed President, who’s currently not a voting member, made some comments yesterday. He said that it will likely be appropriate to cut rates this year but stressed that the near-term is unlikely. Fed Governor Christopher Waller also spoke yesterday. In his speech titled, “What’s the Rush?”, he says he likes the fact that inflation is coming down but doesn’t know if January’s inflation numbers were just a speed bump. These two speakers represent a lot of what the Fed is thinking right now. They know they need to cut rates this year, just not right away. The upcoming inflation, but more importantly, job data will be crucial in their decision making.
Buy now, pay later
We are seeing extraordinary usage of BNPL. Some recent statistics show that 21% of people are using BNPL for groceries, and most BNPL usage is for purchases under $250. It makes you wonder if the economy and consumers are really that strong if necessities, like groceries, are being put on a payment plan. The imputed data we continue to get is likely very skewed.
ZipRecruiter
We heard some comments (hat tip to Peter Boockvar) from Ian Siegel, the CEO of ZipRecruiter, in their earnings call that are in direct contrast to those that say the job market is so strong. While much of the job data is imputed, ZipRecuiter has real data. He said that recruiting services dropped throughout 2023, and that the hiring slowdown was primarily seen in small and medium-sized businesses. The birth/death model from BLS is based on what small and medium-sized businesses are doing but doesn’t accurately reflect what’s happening. It measures businesses opening or closing, but does not consider a drawdown in employees. Another note from the ZipRecruiter CEO was that nearly 80% of jobs added in 2023 were from three sectors: government, healthcare, and leisure & hospitality.
Next week packed with news
Monday: New Home Sales
Tuesday: Appreciation data from Case-Shiller and FHFA
Wednesday: GDP
Thursday: PCE, Pending Home Sales
Technical Analysis
This week mortgage bonds have been steady trading on and around the 200-day moving average. The downtrend and support at the 200-day are battling and we are waiting for a breakout above or below.
The 10-year Treasury continues trading beneath the 100-day Moving Average. If we continue seeing the 10-year trade lower, this will likely portend a decline moving forward. Begin the day floating, watching for a breakout.
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