by Calculated Risk on 12/12/2024 10:14:00 AM

The FDIC released the Quarterly Banking Profile for Q3 2024:

The Industry’s Net Income Decreased From the Prior Quarter, Driven by One-Time Items
Third quarter net income for the 4,517 FDIC-insured commercial banks and savings institutions decreased $6.2 billion (8.6 percent) from the prior quarter to $65.4 billion. The quarterly decrease in net income was largely driven by the absence of about $10 billion in one-time gains on equity security transactions reported in the previous quarter. The absence of these nonrecurring gains was partially offset by strong net interest income in the third quarter.
...
Asset Quality Metrics Remained Generally Favorable, Though Weakness in Certain Portfolios Persists
The past-due and nonaccrual (PDNA) loan ratio increased 6 basis points from the prior quarter to 1.54 percent. This ratio was 18 basis points higher than the year-earlier quarter but below the pre-pandemic average of 1.94 percent.2 Quarterly, banks reported an increase in the PDNA ratio in credit card loan portfolios (up 20 basis points to 3.36 percent), nonfarm nonresidential commercial real estate (CRE) loan portfolios (up 7 basis points to 1.69 percent), 1–4 family residential loan portfolios (up 3 basis points to 1.83 percent), and auto loan portfolios (up 5 basis points to 3.13 percent). Annually, the industry reported the largest PDNA increases in nonfarm nonresidential CRE loan portfolios (up 43 basis points to 1.69 percent), credit card loan portfolios (up 27 basis points to 3.36 percent), and commercial and industrial loan portfolios (up 20 basis points to 1.17 percent).

The industry’s net charge-off ratio decreased 1 basis point to 0.67 percent from the prior quarter but was 16 basis points higher than the year-earlier quarter. This ratio was also 19 basis points above the pre-pandemic average and remained the highest quarterly ratio reported by the industry since second quarter 2013. Credit card and nonfarm nonresidential CRE loan charge-offs drove the quarterly decrease in the net charge-off ratio, which was partially offset by an increase in commercial and industrial loan charge-offs. The credit card net charge-off ratio was 4.48 percent in the third quarter, down 34 basis points quarter over quarter but still 100 basis points higher than the pre-pandemic average. The net charge-off ratio for nonfarm nonresidential CRE loans decreased 9 basis points quarter over quarter to 0.29 percent but was 25 basis points higher than the pre-pandemic average.
emphasis added

Click on graph for larger image.

From the FDIC:

The Number of Problem Banks Increased
The number of banks on the FDIC’s “Problem Bank List” increased from 66 to 68. Total assets held by problem banks rose $3.9 billion to $87.3 billion. Problem banks represent 1.5 percent of total banks, which is within the normal range of 1 to 2 percent of all banks during non-crisis periods.

This graph from the FDIC shows the number of problem banks.

by Calculated Risk on 12/12/2024 08:30:00 AM

The DOL reported:

In the week ending December 7, the advance figure for seasonally adjusted initial claims was 242,000, an increase of 17,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 224,000 to 225,000. The 4-week moving average was 224,250, an increase of 5,750 from the previous week's revised average. The previous week's average was revised up by 250 from 218,250 to 218,500.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 224,250.

The previous week was revised up.

Weekly claims were above the consensus forecast.

by Calculated Risk on 12/11/2024 07:51:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 220 thousand initial claims, up from 213 thousand last week.

• Also at 8:30 AM, The Producer Price Index for November from the BLS. The consensus is for a 0.3% increase in PPI, and a 0.2% increase in core PPI.

• At 12:00 PM, Q3 Flow of Funds Accounts of the United States from the Federal Reserve.

by Calculated Risk on 12/11/2024 01:49:00 PM

Today, in the Calculated Risk Real Estate Newsletter: 2nd Look at Local Housing Markets in November

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to November 2019 for each local market (some 2019 data is not available).

This is the second look at local markets in November. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in November were mostly for contracts signed in September and October when 30-year mortgage rates averaged 6.18% and 6.43%, respectively (Freddie Mac PMMS). These were the lowest mortgage rates in 2 years!
...
Here is a look at months-of-supply using NSA sales. Note the regional differences, especially in Florida and Texas (although November statistics in Florida were likely still impacted by Hurricane Milton).
...
Many more local markets to come!

There is much more in the article.

by Calculated Risk on 12/11/2024 11:30:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI.

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% in November. The 16% trimmed-mean Consumer Price Index increased 0.3%. "The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report".

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. 

On a year-over-year basis, the median CPI rose 3.9% (down from 4.1% in October), the trimmed-mean CPI rose 3.2% (unchanged from 3.2%), and the CPI less food and energy rose 3.3% (unchanged from 3.3%). 

Core PCE is for October was up 2.8% YoY, up from 2.7% in September.

by Calculated Risk on 12/11/2024 08:57:00 AM

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had mentioned when services less rent of shelter was up around 8% year-over-year.  This declined, but is still elevated, and is now up 4.1% YoY.

Click on graph for larger image.

This graph shows the YoY price change for Services and Services less rent of shelter through November 2024.

Services were up 4.5% YoY as of November 2024, down from 4.7% YoY in October.

Services less rent of shelter was up 4.1% YoY in November, down from 4.5% YoY in October

The second graph shows that goods prices started to increase year-over-year (YoY) in 2020 and accelerated in 2021 due to both strong demand and supply chain disruptions.

Durables were at -2.0% YoY as of November 2024, up from -2.5% YoY in October.

Commodities less food and energy commodities were at -0.7% YoY in November, up from -1.2% YoY in October.

Here is a graph of the year-over-year change in shelter from the CPI report (through November) and housing from the PCE report (through October)

Shelter was up 4.8% year-over-year in November, down from 4.9% in October. Housing (PCE) was up 5.0% YoY in October, down from 5.1% in September.

The BLS noted this morning: "The index for shelter rose 0.3 percent in November, accounting for nearly forty percent of the monthly all items increase."

This is still catching up with private data.  

Core CPI ex-shelter was up 2.1% YoY in November.

by Calculated Risk on 12/11/2024 08:30:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in November, after rising 0.2 percent in each of the previous 4 months, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.7 percent before seasonal adjustment.

The index for shelter rose 0.3 percent in November, accounting for nearly forty percent of the monthly all items increase. The food index also increased over the month, rising 0.4 percent as the food at home index increased 0.5 percent and the food away from home index rose 0.3 percent. The energy index rose 0.2 percent over the month, after being unchanged in October.

The index for all items less food and energy rose 0.3 percent in November, as it did in each of the previous 3 months. Indexes that increased in November include shelter, used cars and trucks, household furnishings and operations, medical care, new vehicles, and recreation. The index for communication was among the few major indexes that decreased over the month.

The all items index rose 2.7 percent for the 12 months ending November, after rising 2.6 percent over the 12 months ending October. The all items less food and energy index rose 3.3 percent over the last 12 months. The energy index decreased 3.2 percent for the 12 months ending November. The food index increased 2.4 percent over the last year.
emphasis added

The change in CPI was close to expectations. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 12/11/2024 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 5.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 6, 2024. Last week’s results included an adjustment for the Thanksgiving Holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 5.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 50 percent compared with the previous week. The Refinance Index increased 27 percent from the previous week and was 42 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index increased 30 percent compared with the previous week and was 4 percent higher than the same week one year ago.

“Mortgage rates decreased again for the third consecutive week, with the 30-year fixed rate dipping to 6.67 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications increased 5 percent, driven by a 27-percent surge in refinance activity, as borrowers with higher rates acted on the chance to lower their payments. VA refinance applications were up 85 percent from the previous week, matching some of the larger swings in VA activity reported in recent months.”

Added Kan, “Purchase applications remained relatively strong and have shown annual gains in all but one week over the past three months. In addition to lower rates, purchase activity continues to be supported by sustained housing demand and inventory that continues to grow gradually in many markets.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.67 percent from 6.69 percent, with points decreasing to 0.66 from 0.67 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 4% year-over-year unadjusted. 

Red is a four-week average (blue is weekly).  

Purchase application activity is up about 24% from the lows in late October 2023 and is now above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index increased as mortgage rates declined in September but has decreased as rates moved back up.

by Calculated Risk on 12/10/2024 08:06:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, The Consumer Price Index for November from the BLS. The consensus is for a 0.3% increase in CPI, and a 0.3% increase in core CPI.  The consensus is for CPI to be up 2.7% year-over-year and core CPI to be up 3.3% YoY.

by Calculated Risk on 12/10/2024 03:00:00 PM

The Consumer Price Index for November is scheduled to be released tomorrow. The consensus is for a 0.3% increase in CPI, and a 0.3% increase in core CPI.  The consensus is for CPI to be up 2.7% year-over-year and core CPI to be up 3.3% YoY.

From Goldman Sachs economists:

We expect a jump in used car prices (+2.0%), another increase in airfares (+1.0%) reflecting strong pricing trends, an increase in apparel (+0.5%), and a rebound in car insurance (+0.5%), but a decline in communications (-0.5%) due to seasonal distortions. We expect the shelter components to slow on net (OER +0.33%, rent +0.28%).

We forecast that the headline CPI rose 0.28% in November and 2.7% year-on-year, reflecting higher food (+0.25%) and energy (+0.3%) prices.

From BofA:

We forecast core CPI inflation decelerated slightly to 0.2% m/m (0.23 unrounded) in November after three consecutive 0.3% m/m prints. As a result, the y/y rate should tick down a tenth to 3.2%.

BofA expects headline CPI to be 0.2% and 3.2% YoY.