Morning Report: US PMI softens

Vital Statistics: Stocks are lower this morning as investors fret about a potential slowdown. Bonds and MBS are up. US businesses continued to expand in May, albeit at a slower pace, according to the S&P flash PMI. Manufacturing is in a contraction, while services are still expanding. Inflationary conditions continue to ease, with with firms increasing prices at the slowest pace since October 2020. Manufacturers are cutting prices to boost sales, while services price increases appeared to have recently peaked. The Index of Leading Economic Indicators declined again in May, signaling that a recession is in the cards. “The US LEI continued to fall in May as a result of deterioration in the gauges of consumer expectations for business conditions, ISM® New Orders Index, a negative yield spread, and worsening credit conditions,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “The US Leading Index has declined in each of the last fourteen months and continues to point to weaker economic activity ahead. Rising interest rates paired with persistent inflation will continue to further dampen economic activity. While we revised our Q2 GDP forecast from negative to slight growth, we project that the US economy will contract over the Q3 2023 to Q1 2024 period. The recession likely will be due to continued tightness in monetary policy and lower government spending.” The index has been emitting a recession signal for the past six months or so. The yield curve continues to invert, with the 2s-10s trading close to -100 basis points. An inverted yield curve is generally a recessionary signal. The inversion is worse than the 2020 recession and the Great Recession. The last time we were at these levels was in the early 1980s when Paul Volcker instituted his drastic Fed tightening to break the back of 1970s inflation: Need to make the jump from best-efforts to mandatory delivery and don’t want to spend months doing it? In this case study, Ajay Timothy and Thia Kaleta of NBH Bank describe their process getting started with MCT and how they were able to get mortgage pipeline hedging and best execution loan sales up and running in just ten days. NBH Bank relied on MCT to come together with multiple teams to support them in a safe, effective way outside of normal processing times to ensure there were no gaps in their hedge coverage. Download the case study to learn how MCT exceeded onboarding expectations. [Image] Here are Some More Investing Tips and Resources. Enjoy! Sponsored [Click here to reserve your seat now!]( [Morning Report: US PMI softens](?site= Vital Statistics: Stocks are lower this morning as investors fret about a potential slowdown. Bonds and MBS are up. US businesses continued to expand in May, albeit at a slower pace, according to the S&P flash PMI. Manufacturing is in a contraction, while services are still expanding. Inflationary conditions continue to ease, with with firms increasing prices at the slowest pace since October 2020. Manufacturers are cutting prices to boost sales, while services price increases appeared to have recently peaked. The Index of Leading Economic Indicators declined again in May, signaling that a recession is in the cards. “The US LEI continued to fall in May as a result of deterioration in the gauges of consumer expectations for business conditions, ISM® New Orders Index, a negative yield spread, and worsening credit conditions,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “The US Leading Index has declined in each of the last fourteen months and continues to point to weaker economic activity ahead. Rising interest rates paired with persistent inflation will continue to further dampen economic activity. While we revised our Q2 GDP forecast from negative to slight growth, we project that the US economy will contract over the Q3 2023 to Q1 2024 period. The recession likely will be due to continued tightness in monetary policy and lower government spending.” The index has been emitting a recession signal for the past six months or so. The yield curve continues to invert, with the 2s-10s trading close to -100 basis points. An inverted yield curve is generally a recessionary signal. The inversion is worse than the 2020 recession and the Great Recession. The last time we were at these levels was in the early 1980s when Paul Volcker instituted his drastic Fed tightening to break the back of 1970s inflation: Need to make the jump from best-efforts to mandatory delivery and don’t want to spend months doing it? In this case study, Ajay Timothy and Thia Kaleta of NBH Bank describe their process getting started with MCT and how they were able to get mortgage pipeline hedging and best execution loan sales up and running in just ten days. NBH Bank relied on MCT to come together with multiple teams to support them in a safe, effective way outside of normal processing times to ensure there were no gaps in their hedge coverage. Download the case study to learn how MCT exceeded onboarding expectations. 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