10 Things You Need to Know: October 17, 2023
Key data releases this week include: retail sales (Tue), industrial production (Tue), NAHB Housing Price Index (Tue), housing starts (Wed), Beige Book (Wed), existing home sales (Thu), and leading economic indicators (Thu).
Haver
October 11, 2023
The Producer Price Index for final demand rose 0.5% (2.2% y/y) in September following a 0.7% August increase. A 0.3% rise had been expected in the Action Economics Forecast Survey. The PPI excluding food and energy prices rose 0.3% (2.7% y/y) following a 0.2% rise. A 0.2% gain had been expected. The PPI excluding food, energy and trade services prices rose 0.2% (2.8% y/y).
Haver
October 12, 2023
The Consumer Price Index rose 0.4% in September following a 0.6% August increase. The rise compared to a 0.3% gain expected in the Action Economics Forecast Survey. The 3.7% y/y rise remained increased from June’s 3.0%, but remained well below the 9.1% high in June 2022. Prices excluding food & energy rose an expected 0.3% last month, the same as in August. The 4.1% y/y increase remained the lowest since September 2021 and down from a 6.6% high in September 2022.
Bloomberg
October 11, 2023
The September FOMC meeting minutes noted that “a majority” of Fed officials saw one more rate increase “would likely be appropriate” to help cool off demand and get inflation closer to their 2% inflation target over the next two years, while “some” said “no further increases would be warranted.” In forecasts issued last month, 12 of 19 officials projected one more hike this year, while the median estimate showed they expected fewer rate cuts in 2024 and 2025.
Capital Economics
October 12, 2023
The US government appears to be about to tighten the controls that it brought in a year ago on China’s access to cutting-edge chips. One consequence will be that Chinese firms will find it harder to operate near the technological frontier in AI.
FT
October 12, 2023
The ruble gained strength on Thursday after Russian President Vladimir Putin reinstated capital controls forcing large companies to sell foreign currency revenue on the domestic market. The ruble rose as much as 4% against the dollar Thursday before settling back to about a 2% gain.
Barron’s
October 16, 2023
Seasonality suggests that stocks should be starting to rally right about now. The S&P 500’s strongest period begins on the 197th trading day of the year—Oct. 13 in 2023—and extends through year end. Over that period, the S&P 500 has risen 70% of the time going back to October 1953, with an average gain of 6.8% when it has risen.
Barron’s
October 16, 2023
“The real yield is getting back to abnormally high levels,” says Rob Arnott, the founder of Research Associates. “Looking at 10- and 30-year TIPS and 10- and 30-year Treasuries, the easy choice is to own TIPS. Inflation is more of a risk than the markets give it credit for.”
Barron’s
October 16, 2023
Car buyers face some tough numbers. A record 17.5% of new-car buyers in the third quarter paid more than $1,000 a month for a vehicle. Three years ago, less than 7% of new-car buyers spent that much. Three years ago, the average interest rate to finance a new car was about 4.6%. Now, it’s 7.4%. Three years ago, the average price for a new car was some $39,000. Now, it’s $48,000. Those numbers imply that monthly car payments should be up 37%. In fact, they’re up less than 30%.
Bloomberg
October 16, 2023
Federal Reserve Bank of Philadelphia President Patrick Harker said higher interest rates are making it more challenging for first-time home buyers by raising borrowing costs and limiting inventory, which is also leading to higher home prices. Harker, who votes on rate decisions this year, also repeated comments he made last week asserting the Fed can hold its benchmark rate steady as long as there is not a sharp turn in the economic data.