00:00We have existing home sales. Let's get straight to Michael McKee for the data. Michael.
00:04Well, existing home sales for the month of August come in as expected,
00:08but that's not particularly good news because we have a 2% drop to a 3,980,000 rate.
00:14And we have seen nothing but declines in new home sales and existing home sales for
00:20months and months now because interest rates are high. And after today's PPI and after what we
00:27have seen in the markets recently, mortgage rates are only going higher and higher. And that is only
00:33going to make it worse for the home builders and home sellers. So the interest rate sensitive section
00:40of the economy is being affected. But whether that's going to change much for the economy or the
00:45Fed, probably not. Not a lot they can do about it. Yeah, I seemingly missed my opportunity to refinance
00:51my house. Looking though at the 10-year right now, we're at 4.92%. Expectations obviously going into
00:56CPI tomorrow ahead of the Fed meeting next week. What are you watching? And how critical is the
01:01is the CPI print? Are there any kind of factors in particular you're keeping an eye on? Well, CPI is
01:05going to be sort of the decision maker here because it's the last inputs into PCE, which is what
01:10Fed officials look at the PCE index, which won't be out until the end of the month. But once you
01:16have
01:16CPI and PPI, you can plug their components into the PCE matrix and you can come up with a pretty
01:22good
01:22estimate. And the numbers we got today out of the PPI numbers that go into PCE were not particularly
01:29good. The headline, of course, was up four tenths of the month. Hospital services go into a PCE up
01:35half a percent. Truck transport of freight, which is services, up two percent. And services are the
01:40category a lot of the hawks have been worried about. Airline tickets, 4.2%. And portfolio management,
01:47the only area that went down. But that has a methodological change coming to the PCE. So we're
01:53not exactly sure how that will play out. But it will be bad news. And then the other bad news
01:59is
01:59energy prices went up. We saw diesel prices up by 22 percent, 24 percent rather, in August for PPI. And
02:07the PPI only goes through the 11th of August. And we've seen since then prices arising significantly.
02:14And if you look at oil futures, you can see a massive change in the last month from where we
02:21were to what's going to happen in 2027 as far as traders are concerned. And the Fed has to look
02:27to
02:282027 when they think about raising interest rates and what's going to happen. And it's more pressure
02:33down the road. I mean, to a certain extent, the bond market is telling us that right now. I mean,
02:38we're almost at 492 on the 10-year yield, Michael. Ed Yardini was saying he's not going to worry if
02:43it's between 4 and 5 percent. We're not really talking about the bond vigilantes being out. But
02:47we are now very close to 5 percent. Well, it becomes also a question of does the Treasury
02:52vigilante come out again? Does Scott Besson come out and try to manipulate this? And there are some
02:57feelings. And I've seen some analyst reports over the last hour or so that suggest that if we keep
03:02going, we might see him again because they think that 5 percent on the 10-year is a line in
03:07the sand
03:08for Treasury. And they were saying earlier that for the 30-year, 5.3, and we hit that. So if
03:16the
03:17Treasury is concerned about interest costs, they're more concerned right now.
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