US DATA: Firms’ Unit Cost Expectations Extend Plateau – Atlanta Fed

The Atlanta Fed's Business Inflation Expectations survey saw 1Y ahead expectations keep to a narrow range, having pared but not fully reversed the tariff-driven increase. Unit sale comparisons to "normal" levels were less pessimistic than recent quarters. * 1Y ahead inflation expectations from the regular monthly survey, defined as the mean expected change in unit costs, was essentially unchanged in October at 2.27% after two months at 2.26% and before that 2.29% in July. * It consolidates an easing from a recent peak of 2.76% in April but remains a little above the 2.04% seen in December or the 1.94% averaged in 2019. * A separate quarterly question showed a slight relative improvement in firms' unit sales levels, interestingly led by medium and small firms whereas large firms reported their largest decline in unit sales relative to "normal" since July 2020. * We say a relative improvement as the average industry-weighted response saw sales being -5.5% below "normal", its least negative since Apr 2024. The chart below shows a persistent bias to negative readings here, even if they were smaller (-2% averaged in the three years ahead of the pandemic). Source: Atlanta Fed

US DATA: Chicago Area Econ Surveys Point To Better Activity, Weak Otherwise

The Chicago Fed Survey of Economic Conditions (CFSEC)'s regional activity index rose to +15 in October from -14 prior, suggesting above-trend growth in the 7th Fed District. While this series is volatile, we note that this is the highest reading since March 2022, and comes with improvements in both manufacturing (+14 after -10) and nonmanufacturing (+16 after -19). * This represents an indication of solid regional activity - but the subindices were actually quite poor across the board: hiring and capex intentions were negative (ie below average), while both labor cost and nonlabor cost pressures were also negative, suggestive of more moderate inflation. * The indices roughly mirror the MNI Chicago Business Barometer (PMI) and national ISM Services/Manufacturing, though with more month-to-month volatility, so can be considered a positive in the services activity column after weak NY and Philly Fed surveys for October, as well as a solid manufacturing reading vs mixed NY / Philly. * The latest Chicago Fed entry to the Beige Book covering September: "Economic activity in the Seventh District was little changed over the reporting period, and contacts expected a slight decrease in activity over the next year. Consumer spending increased modestly; construction and real estate activity increased slightly; employment was flat; nonbusiness contacts saw no change in activity; business spending declined slightly; and manufacturing activity declined modestly."

MNI: US EIA: CRUDE OIL STOCKS EX SPR -0.96M TO 422.8M OCT 17 WK

* US EIA: CRUDE OIL STOCKS EX SPR -0.96M TO 422.8M OCT 17 WK * US EIA: DISTILLATE STOCKS -1.48M TO 115.6M IN OCT 17 WK * US EIA: GASOLINE STOCKS -2.15M TO 216.7M IN OCT 17 WK * US EIA: CUSHING STOCKS -0.77M TO 21.2M BARRELS IN OCT 17 WK * US EIA: SPR +0.82M TO 408.6M BARRELS IN OCT 17 WK * US EIA: REFINERY UTILIZATION WEEK CHANGE +2.9% TO 88.6% IN OCT 17 WK

US DATA: Purchase Mortgage Applications Fall By Most Since July

MBA mortgage applications were little changed last week, with a lift in refis offsetting a sizeable drop in new purchase applications. Mortgage rate spreads ticked higher after declines had slowed in recent weeks, offering a diminished tailwind for applications. * MBA composite mortgage applications dipped -0.3% (sa) last week, essentially unchanged having fallen a cumulative 19% since late September after a refi-driven 42% jump in the first half of September. * There were conflicting drivers on the week, with new purchases sliding -5.2% (the largest drop since late July) vs refis increasing 4.0% (largest increase since mid-Sept). * For context, composite applications are at 67% of 2019 levels, with 61% for new purchases (a recent high of 67%) and 70% for refis (recent high of 93%). * The 30Y conforming mortgage rate eased another 5bps to 6.37%, close to the 6.34% in mid-Sept at what was the lowest since Sep 2024 on Fed easing expectations at the time. * The 30Y jumbo rate meanwhile dipped 8bps to 6.39%, taking the two rates back close to each other after some disjointed weekly moves saw the jumbo rate trade as much as 17bp higher in early October for its most in nearly a year. * Mortgage spreads were little changed to swaps but widened a touch to Treasury yields, in the past an area Bessent has wanted to see them lower. The 30Y mortgage rate to 10Y swaps held around 280bps, below the 300+/-5bp seen for some time since reciprocal tariff announcements in April and below the 285bp averaged in Q1. The 30Y to 10Y Tsy yield spread meanwhile lifted ~5bps to 235bps for its highest since August but remains close to lows since Mar 2022.