Housing Market Under Pressure
Mortgage data released this morning showed a 2.7% drop in applications for the week ending October 9. Purchases fell 4% from the prior week and were 16% lower than a year ago. Refinancings slipped 0.4% from last week and sat more than 50% below last year as US mortgage rates keep climbing.
The 30-year fixed rate rose to 7.56% this morning. That weighs on the outlook for the rest of the year, especially after higher-than-expected inflation made another rate hike likely in October.
China's Export Engine Runs Flat Out
China's outbound shipments rose 36% last month as global demand for high-tech products kept its factories busy. Deliveries to the US jumped 40%, the fastest pace in five years. Imports, a key read on domestic demand, rose 31%. These numbers put China's trade surplus back on track to break the record of $1.2 trillion.
Trade keeps driving China's growth, but the latest CPI data still points to weak domestic demand. Producer prices in China just hit a four-year high as higher energy costs push up production costs.
China acts as a leading indicator for commodities, so this could offer clues for tomorrow's US PPI report. Kevin Green argues that link may not hold this time, since China may be shielding its economy from some of these higher prices.
What to Watch Next
Producer prices come in the morning, followed by retail sales data, which should show how consumption is holding up - relevant because consumers are acting very differently from how they describe their mood. TSMC (TSM) reports earnings tonight, the next major test for the AI trade. Monthly revenue figures already give some hints, but the full report will draw close scrutiny tomorrow morning.
