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News You'll Use

Mortgage rates were fell this week despite the Fed pushing back on a March rate cut. Fed Chair Powell pushed back on a rate cut in March, saying that the Fed committee wants to see more data to make them feel confident that they have brought inflation down to their 2% target. While this was going on, a regional bank reported higher than expected loan loss provisions followed by a Japanese bank also reporting that they expect a net loss of $191 million tied to U.S. commercial property. This really seems like the main story for rates heading into the weekend. Assuming that there is not more to unfold from this story, this could prove to be an interesting dilemma for the Fed. They have an economy that is running hot with inflation still coming down, despite interest rates being restrictive. The issue is that if they keep rates too restrictive, they risk something breaking, which is what the regional banking news alludes to. The question is are they afraid of cutting too soon and inflation coming back or are they afraid of holding rates restrictive too long. If this is a one-off incident, once the market gets the all clear, there's room for rates to move higher. If not, then that brings a good deal of uncertainty into the picture. To add one more variable to the mix, we have the jobs report. The Fed will be in a bigger hurry to cut rates if the unemployment rate starts to tick higher. 

• U.S. 10-year Treasury on Thursday afternoon is at 3.88%

• S&P CoreLogic Case-Shiller 20-City House Price Index came in lower than analyst's expectations (0.15% m/m vs expectations of 0.5% m/m).

• Conference Board Consumer Confidence came in-line with analyst's expectations (114.8).

• JOLTS Job Openings came in higher than analyst's expectations (9.026mm openings vs expectations of 8.75mm openings).

• ADP Employment Change came in lower than analyst's expectations (107k jobs vs expectations of 150k jobs).

• ISM Manufacturing came in higher than analyst's expectations (49.1 vs expectations of 47.2).

• Initial Jobless Claims came in higher than analyst's expectations (224k claims vs expectations of 212k claims).

• Mortgage Applications fell by 7.2% this week