More inflation data this week – The Daily Tearsheet

Vital Statistics:

Stocks are higher this morning as it looks like President Trump will be reining in some of his tariff plans. Bonds and MBS are down.

The upcoming week will be dominated by the Personal Spending and Outlays report on Friday, which will contain the PCE Price Index, which is the Fed’s preferred measure of inflation. There was some talk that the benign CPI readings won’t necessarily translate into a benign PCE. The Street is looking for a 0.3% MOM reading on the headline number and a 2.5% YOY gain. The Street is looking for a 0.3% gain on the core rate and a 2.7% annual number.

Aside from the PCE numbers, we will get home prices with Case Shiller and the FHFA House Price Index. We will also get new home sales, consumer confidence and the final revision for Q4 GDP.

The national mortgage delinquency rate ticked up 5 basis points to 3.53% according to the ICE Mortgage First Look. This is up about 19 bps from a year ago, but well below pre-pandemic levels. FHA delinquencies accounted for 90% of the increase. Foreclosure starts and sales fell, but they are beginning to pick up after the VA foreclosure moratorium expired. The Los Angeles fires are also contributing to the increase in delinquencies.

Trump is looking to narrow the reciprocal tariffs that are scheduled to go into place on April 2. Cars and microchip tariffs look to be put on hold, although others will go into effect. I suspect the market sell-off is increasing uncertainty (Austan Goolsbee mentioned it on Friday) and that is causing the reconsideration.

The Wall Street Journal is reporting that FHFA Chief William Pulte is looking to privatize Fan and Fred. He overhauled senior leadership, and sent a bunch of board members packing. One idea would be to transfer the government’s ownership to the potential sovereign wealth fund that Trump is interested in creating.

Using a sovereign wealth fund (which gets its capital from the Federal Government) to buy Fan and Fred and take them “private” helps get around the amount of capital they would need to raise in the private markets, but this doesn’t really “privatize” the GSEs – it just changes the ownership from one government entity to another. I guess it would be “privatization” in name only – they would still be controlled by a government entity. So not sure sure what that whole exercise buys anyone.

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Please reach out to brent@thedailytearsheet.com