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Feb 11, 2021
Mortgage delinquency rates dropped 92 basis points to 6.73% in the fourth quarter of 2020, according to the Mortgage Banker's Association's survey. While this is two straight quarters of decreases, the total delinquency rate is still 296 basis points above where it was at this point last year. Conventional, Federal Housing Administration, and Veterans Affairs loans all saw their respective delinquency rates drop in the fourth quarter of 2020.
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Feb 03, 2021
The U.S. economy lost momentum in December, setting up unfavorably growth early this year. Our estimate of real monthly GDP fell 0.2% (not annualized) in December. The drop isn't surprising given the surge in COVID-19 cases and tighter restrictions by state and local governments. The fiscal stimulus passed late last year should help support the economy early this year, but the boost to consumer spending will be lagged because the pandemic is preventing consumers from consuming certain services. Something to watch is the inventory rebuild, which could boost GDP more than expected in the first half of this year.
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Jan 29, 2021
The December report is the last one before the effects of the end-of-year $930 billion federal pandemic relief bill become fully visible. Nominal personal income rose by 0.6% in December, more than either we or the consensus expected. This follows a downwardly revised 1.3% decline in November (previously 1.1%). The improvement was largely thanks to government transfers, which fell by 3.5% in November but gained 2.3% in December. Meanwhile, compensation of employees rose 0.5%, up from November's 0.4% increase. Nominal disposable income similarly rose by 0.6% after a downwardly revised drop of 1.5% in November. The personal savings rate climbed to 13.7% from 12.9% the month before.
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Jan 29, 2021
Real consumer spending fell in December for the second straight month as increased infections drove more restrictions on activity and a greater reluctance on the part of consumers to go out and spend. Real spending fell 0.6% after a downwardly revised 0.7% drop in November (previously 0.4%), which was the first decline since April. Goods spending led the decline, falling 1.4%, the same as in November. Nondurable goods spending fell 1.4% and durable goods spending fell 1.3%. Service spending fell 0.2%. Prices increased 0.4%, so nominal spending fell only 0.2% after rounding. The saving rate rose to 13.7% from 12.9% as the latest round of stimulus checks boosted transfer income and wage income rose despite job losses.
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Jan 29, 2021
The increase in U.S. inflation in December will continue through the first half of this year but it won't rattle the Fed, as transitory factors will be behind the acceleration. The headline PCE deflator increased 0.4% in December, in line with our forecast but above the consensus for a 0.3% gain. Food prices rose 0.2% in December after falling 0.1% in November. The PCE deflator for energy was up 4.2% in December, noticeably stronger than that seen over the past few months and boosted by higher gasoline prices. The core PCE deflator, excluding food and energy, was up 0.3%, stronger than both our and consensus expectations. On a year-ago basis, the headline and core PCE deflators were up 1.3% and 1.5%, respectively. Inflation is going to perk up, but the Fed isn't raising rates soon.
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Jan 28, 2021
Manufacturing activity accelerated in the Kansas City Fed District, with the composite index rising 3 points to a reading of 17 in January. Expectations for future activity also continue to improve. The production index increased 10 points to a reading of 22 while the volume of shipments index advanced 11 points to 28, its highest reading in over a year. Prices paid for raw materials continue to rise significantly with the index at its highest reading in nearly a decade. Similarly, prices paid for finished goods also increased in January.
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Jan 28, 2021
The nominal U.S. goods deficit narrowed by $3 billion in December, from $85.5 billion to $82.5 billion. The other two months of the fourth quarter, however, saw the deficit widen, making trade a 1.5-percentage point drag on Thursday morning's fourth-quarter GDP estimate. COVID-19-induced supply chain disruption will continue in 2021 as uneven recoveries take hold across the globe.
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Jan 28, 2021
Wholesale trade inventories inched up 0.1% in December after stockpiles were unchanged in November. Durable goods inventories held flat, while nondurables grew 0.3%. Despite the slowdown in recent months of retail sales, retail inventories grew again, by 1%. Excluding motor vehicle and parts, retail inventories expanded 1.1%.
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Jan 27, 2021
Mortgage applications slid by 4.1% in the week of January 22, adding to the 1.9% decline in the previous week. The purchase index fell by 4%, while the refinance index was down 5%. Refinance and purchase applications remain well above year-ago and pre-pandemic levels, as low rates and shifting preferences are fueling housing demand. We expect demand for new mortgages to continue in 2021. Since the previous week, the contract rate on 30-year fixed-rate mortgages increased by 3 basis points, to 2.95%, in line with consistently accommodative monetary conditions.
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Jan 25, 2021
Global business sentiment remains dour, consistent with a global economy that is struggling to avoid renewed recession. Businesses remain especially worried about the intensification of the pandemic across much of the globe. Assessments of present conditions are notably dark. Business sentiment is strongest in the Asia-Pacific region and weakest in North America, consistent with the virulence of the pandemic. Hiring intentions, demand for office space, and pricing power also remain notably weak, while sales, investment intentions and credit availability are stronger. Expectations regarding conditions this summer are much better, but they have weakened in recent weeks.
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Jan 05, 2021
The consumer credit market expanded in December, increasing by $77 billion, a 0.55% month to month change. The consumer credit market is now $14.1 trillion in outstanding debt and is 3.98% higher than where it was last year. The year over year growth increased from last month as strong overall balance growth continues. While delinquency rates increased, charge off rates did not and the increase in delinquencies is partly explained by seasonality and partially by previous stimulus fading. With the passage of the stimulus bill, elevated levels of delinquencies and defaults do not seem likely.
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Dec 22, 2020
U.S. consumers turned more pessimistic in December as another wave of confirmed COVID-19 cases has delivered a blow to the labor market. The Conference Board's consumer confidence index dropped from a revised 92.9 in November to 88.6 in December, well below either our or consensus expectations. The decline was attributed to a drop in consumers' assessment of the present situation, as it fell from 105.9 to 90.3. Expectations rose in December, rising from 84.3 to 87.5. There is a deterioration in the labor market differential, adding to the laundry list of signs that the labor market deteriorated in December.
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Dec 21, 2020
The Moody's Delinquency Tracker total delinquency rate declined 18 basis points to 7.59% in November. The decrease this month is thanks to modifications for loan relief, not because delinquency trends are improving. November's decline stemmed mainly from delinquencies in retail and hotels. All subcomponents decreased this month except for multifamily and self-storage. Meanwhile, all regional delinquency rates declined except the West's delinquency rate.
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Dec 18, 2020
Leading economic indicators for November packed on another increase despite signs elsewhere in the economy that the recovery is slowing. The Conference Board's Leading Economic Index ticked up 0.6% in November to 109.1, a touch above the consensus expectations. This reading follows a 0.8% increase in October and a 0.7% rise in September. The coincident index rose 0.2%.
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Dec 10, 2020
U.S. initial claims for unemployment insurance jumped from 716,000 to 853,000 in the week ended December 5. New filings are not as reliable as they were in the past. The Government Accountability Office issued a report that claims are being inflated by fraud and a backlog. Outside of this, claims can swing wildly this time of year because of seasonal adjustment issues around the Thanksgiving holiday. Continuing claims rose from 5.527 million to 5.757 million in the week ended November 28. The number of those receiving Pandemic Unemployment Assistance rose by nearly 140,000 in the week ended December 5 to 427,609.
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Dec 09, 2020
An unexpected and large build in crude oil inventories will push down on oil prices. Commercial crude oil inventories jumped up by 15.2 million barrels in the week ended December 4, far exceeding consensus expectations of an 849,000-barrel decline. Gasoline inventories rose by 4.2 million barrels, beating analyst expectations that stocks would build by 2 million barrels. Distillate inventories rose by 5.2 million barrels, well above analyst predictions of a 789,000-barrel increase. Refinery capacity utilization rose to 79.9% from 78.2%. Over the last four weeks, total U.S. oil demand was 7.5% lower than the same period last year.
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