Morning Report: inflation remains below the Fed's target

Vital Statistics:

	Last	Change
S&P Futures	2126.3	2.5
Eurostoxx Index	339.5	-1.3
Oil (WTI)	48.2	-0.6
US dollar index	88.8	0.1
10 Year Govt Bond Yield	1.84%
Current Coupon Fannie Mae TBA	103
Current Coupon Ginnie Mae TBA	104
30 Year Fixed Rate Mortgage	3.62

Markets are up on earnings and merger mania. Bonds and MBS are down.

Personal Incomes rose 0.3% in September, which was a little below expectations. Consumer spending rose 0.5%, which was in line with expectations. Core PCE inflation - the number the Fed uses to measure inflation - rose 1.7% YOY, so we are still below the 2% target. 

The Chicago PMI Index fell to 50.6 from 54.3. 

The FBI re-opened the email investigation on Hillary late Friday night. Democrats are attacking Comey (who just went from hero to goat). This will take until mid-week to be fully reflected in the polls, and the pundits will be watching polls in VA and NC closely. 

IMO, regardless of who wins, gridlock will be the result, unless Democrats sweep. So more of the same. I don't see much of an effect happening in either interest rates or stock prices. The Fed is much more influential than who occupies the WH. 

Home prices are up 0.3% MOM and 5.3% YOY, according to Black Knight Financial Services. The index now stands at $266k, which is 0.7% below the 2006 peak of $268. The report has good state-by-state info, so check it out. 

Banks continue to hoard Treasuries, and are tightening credit to business. Deposit growth is outstripping loan demand, which is the biggest reason. As the US savings rate increases, consumer spending is affected. Part of this is demographics: The baby boom is retiring and will inevitably cut spending, while the Millennials have yet to make any real money and start spending.