Daily Rate Update: July 9th-13th

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Friday – July 13, 2018

Consumer Sentiment edged lower in early July but remains near lofty levels. The continued strength in the index is due in part to favorable job and income prospects. The preliminary July Consumer Sentiment Index came in at 97.1 versus the 97.8 expected and down from 98.2 in June. Looking ahead, there are rising concerns about the potential negative impact of tariffs on the domestic economy. In comparison, in July 2017 the index was at 93.4.

Three of the largest banks in the nation reported earnings this morning showing mixed results. JPMorgan Chase reported a record quarterly profit of $8.3 billion, an increase of 18% from the same period last though below first quarter profits of $8.7 billion. Citigroup reported revenues that were below forecasts while earnings per share beat expectations. Wells Fargo reported that revenues and earnings missed expectations.

Next week Fed Chair Powell will be on Capitol Hill as he will give his semi-annual testimony on the state of the U.S. economy to Congress on Tuesday and Wednesday. It was formerly known as the Humphrey-Hawkins testimony – a reference to the 1978 law that requires Fed Chairs to deliver testimony twice a year. Mr.Powell’s testimony comes two weeks before the next Federal Open Market Committee meeting on July 31-August 1.

Courtesy of Mortgage Market Guide

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Thursday – July 12, 2018

The Bureau of Labor Statistics reports that the inflation reading Consumer Price Index (CPI) rose 2.9% in the 12-months ending in June from 2.8% in May. It was the largest increase since the year ending February 2012. The energy index increased 12.0% over the past year, as the gasoline index increased 24.3%.

CPI increased 0.1% in June versus the 0.2% expected after rising 0.2% in May. The Core CPI, which strips out food and energy rose 0.2% in June, in line with estimates, up 2.3% year over year. The Consumer Price Index is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Mortgage rates were essentially unchanged in the latest week and remain historically low. Freddie Mac reports that the 30-year fixed-rate mortgage was 2.53% with an average 0.50 in points and fees for the week ended July 12. Freddie Mac said, “A record number of people quit their job last month, most likely for a new opportunity with higher wages and better benefits. This positive trend, along with these lower mortgage rates, should increasingly give some previously priced-out prospective homebuyers the financial wherewithal to resume their home search.”

Courtesy of Mortgage Market Guide

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Wednesday – July 11, 2018

Higher energy costs pushed wholesale prices higher in June which led to the biggest annual increase in prices in 6 1/2 years. The Producer Price Index (PPI) rose 3.4% annually in June while month over month saw an increase of 0.3%. The so-called Core PPI, which strips out volatile food and energy, rose 0.3% from May, year-over-year +2.7%. The Producer Price Index is a family of indexes that measures the average change over time in the selling prices received by domestic producers of goods and services.

U.S. Stocks are lower though off their worst levels after the White House levied additional tariffs on $200B in Chinese exports coming into the U.S. last night. This sell off comes after a nice multi-day rally. Stocks have pushed higher lately and have easily shrugged off tariff headlines due in part to a strengthening economy, strong consumer confidence, relatively low inflation and a sense of strong quarterly earnings this week.

After rising since the beginning of 2018 until mid-May, mortgage rates have now edged lower in recent weeks. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage fell three basis points in the latest week to 4.76% with an average 0.43 in points while the jumbo 30-year rate also fell three basis points to 4.68%. Within the report it also stated that the purchase index climbed 6.5% while the refinance index fell 3.8%.

Courtesy of Mortgage Market Guide

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Tuesday – July 10, 2018

The NFIB Small Business Optimism Index remains historically high as sales and profits maintained strength in June. The Small Business Optimism Index hit 107.2 in June, down 0.6 from May, its sixth highest reading in survey history. “The first six months of the year have been very good to small business thanks to tax cuts, regulatory reform, and policies that help them grow,” said NFIB President and CEO Juanita Duggan. Since December 2016, the Index has averaged lofty levels of 105.4, well above the 45-year average of 98 and just below the all-time high of 108.0 from July 1983. The biggest problem employers are now facing is finding qualified workers to fill positions.

Job openings remained at near all-time highs in May as the labor markets continues to gain strength. The Bureau of Labor Statistics reports that there was 6.6 million job openings on the last business day of May, just below the series high of 6.8 million in April, according to its JOLTS (Job Openings and Labor Turnover Survey) report. The report is closely monitored by the members of the U.S. Federal Reserve.

Mortgage delinquency rates have been edging lower as the economy and job markets strengthen. CoreLogic reports that the 30 days or more delinquency rate for April 2018 was 4.2%. In April 2017, 4.8% of mortgages were delinquent by at least 30 days or more including those in foreclosure. This represents a 0.6% decline in the overall delinquency rate compared with April 2017. CoreLogic says that delinquency rates are nearing historic lows, reflecting a long period of strict underwriting practices and improved economic conditions.

Courtesy of Mortgage Market Guide

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Monday – July 9, 2018

Sentiment in the home purchase market slipped in June from May, reports Fannie Mae. The Fannie Mae Home Purchase Sentiment Index (HPSI) fell 1.6 points in June from May to 90.7. The net share of Americans who said now is a good time to purchase a home was unchanged. Americans expressed a decreased sense of job security, with the net share who say they are not concerned about losing their job falling 2 percentage points this month. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making.

Quarterly earnings kick off this week with JPMorgan Chase, Wells Fargo and Citigroup set to report on Friday. It is expected that S&P 500 companies will report 21% growth in earnings according to Thomson/Reuters. Investors will focus on warnings for future earnings surrounding recent tariffs. U.S. Stock markets are higher to begin the week as traders and investors shrug off the global trade issues.

Time to get off the couch to better health. According to the Center for Disease Control and Prevention, just 23% of American adults meet the “national physical activity guidelines,” i.e., they complete at least 2.5 hours per week of “moderate-intensity aerobic physical activity” or at least 1.25 hours per week of “vigorous-intensity aerobic physical activity,” or some equivalent combination.

Courtesy of Mortgage Market Guide

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