Inflation Read This Week

January 9, 2023

The Federal Reserve, and its intents and actions through its Federal Open Market Committee, continue to consume the attention of the markets. The Fed has lent stability to the U.S. markets, and the economy, through its actions. But its actions are continually second-guessed… Who likes that in their lives? And any economic news that comes out is weighed in terms of how it might impact the Fed.


Orion’s management pays careful attention to economic news. Last week we received a stellar jobs report for December. It was generally encouraging, showing that non farm payroll growth slowed modestly but remained solid with a 223K monthly gain. The unemployment rate fell two tenths of a percentage point to 3.5%, matching its lowest level on record since 1969. And wage growth fell. Orion’s leaders believe that it will take, however, more than just this report to convince the FOMC that supply and demand in the labor market are in healthy balance.


Inflation, and its impact on the Fed’s thinking, will be in the spotlight this week with the Consumer Price Index report for December due out on January 12. The headline consumer price index reading for December is expected to cool to + 6.7 percent from +7.1 percent in November and be up 0.1 percent on a month-over-month comparison. Core CPI is forecast to be up 5.6 percent and up 0.2 percent month-over-month.


The focus from market watchers will be if the CPI update alters the consensus view that the Federal Reserve will hike interest rates by 50 points in February and another 25 points in March before going on hold at a terminal rate of 5.0% to 5.25%.


Orion’s broker clients, however, and your borrowers, generally don’t focus on daily economic news that is released. Inflation influences the Fed in its decision making, which in turn influences long-term mortgage rates. Brokers focus on the products that we offer, and the service that we provide, in helping them finance the purchase or refinance of a home.


Coming away from the holidays, and plunging into the first quarter of 2023, Orion’s focus is on offering you the best service, a wide array of mortgage products, and competitive prices just as we have done in the past.

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