Morning Report - Market volatility isn't going to change the Fed's thinking

Vital Statistics:

	Last	Change	Percent
S&P Futures	1973.9	-15.4	-0.77%
Eurostoxx Index	3260.0	-20.8	-0.63%
Oil (WTI)	42.09	-0.5	-1.10%
LIBOR	0.325	-0.002	-0.55%
US Dollar Index (DXY)	95.82	0.205	0.21%
10 Year Govt Bond Yield	2.14%	-0.04%
Current Coupon Ginnie Mae TBA	104.1	0.1
Current Coupon Fannie Mae TBA	104	0.3
BankRate 30 Year Fixed Rate Mortgage	3.85

Stocks are taking a breather after a big two-day rally. Bonds and MBS are up.

Personal Income rose 0.4% in July, in line with expectations. Personal Spending rose 0.3%. The Core PCE Index (The Fed's preferred measure of inflation) rose at 1.2% YOY. Nice to see a little wage inflation. On the other hand, the low PCE inflation is going to worry the Fed. 

Note that the National Labor Relations Board just issued a pro-union decision to make a company that hires a temporary agency for workers a joint employer. This will supposedly make it easier for workers to unionize and it makes the ultimate employer liable for what happens to temps. This was considered a big win for the unions. Does it ultimately result in higher wages, or simply more campaign cash for Democrats? I am betting on the latter.

St. Louis Fed Head James Bullard says that the recent volatility in the markets isn't going to be much of a factor in the FOMC's decision-making next month. The Fed Funds futures however discounted the probability of a Sep rate hike from about 50% to about 30%. 

Pending Home Sales rose 0.5% in July. The real estate market is inching better, but tight supply and affordability issues are holding things back a little. 

Consumer sentiment fell in August, according to the University of Michigan. The 91.9 reading came in below expectations.