Monday Mortgage Minute – Inflation to weigh on mortgage rates this week #rates #inflation #mortgage

Here is a quick recap of what went down last week.

Monday ISM Manufacturing was a Miss, but not by much. This is what we expected and is another log on the fire that the overall economy is still slowing as the Fed intends. Even a reversal for the better in the coming months will not change Fed policy as this is still just 1 factor among ALL the variable they are juggling right now. Yes, Juggling.

Tuesday JOLTS – Job Opening and Labor Turnover Survey was a HUGE miss and this is good news. Less job openings essentially means less opportunity for people to make money which makes its way into the economy, thus keeping prices high and inflation steady. This is also the first time in almost 2 years that the number was under 10M openings. For nearly 24 months we had somewhere between 10 million to 11 million job openings and that was making it more difficult on the Fed tamp down inflation.

Wednesday was a punch to the gut when ADP non-farm employment change came in way lower than projected. Fewer jobs than forecast spells trouble on personal budgets and small business growth projections; however, it does favor the Fed’s agenda of slowing the labor markets. Once again, of the many tools they claim to have, suppressing labor growth as a result of credit tightening on the business sector, is part of the plan.

Thursday we got even more “bad” news on jobs when unemployment claims came in higher than expected. The increase of corporate layoffs that are set to continue through 2023 and possibly into 2024 is beginning to be reflected in this figure. Again, I don’t want more people to be out of work, but it’s what our “betters” are calling for…so we have to understand and interpret what this means to us at the personal level.

And finally, Friday’s lower unemployment rate was a headliner! Even though the markets were closed for Good Friday, this 3.5% print coming in lower than last months 3.6% print could already spell trouble for the next Fed meeting…Why? Remember when Jerome Powell said they need the unemployment rate to be at 4.5% by end of year 2023?…This month’s reading of 3.5% is a lower number than the previous months reading which means we are now moving in the wrong direction, and now with less time on the clock. They still need to get to 4.5% unemployment and now only have 8 whole months remining to do so.

And there’s no break this week with a slew of inflation readings coming out. Remember these are backwards looking so what we need to our eye on is slowing inflation to eventually target a flattening, and then a reversal. If you missed our full breakdown of the Fed Press conference where I detailed when this will be, you can click the banner at the top of this video to watch that next.

In summary we will have Fed members speaking this week, CPI, CORE CPI, PPI, CORE PPI, retail sales, Core retail sales, and preliminary consumer sentiment all hitting us hard this week.

Strength in these figures will mean there is more tightening the fed may have to do in order to grind to a stop all this entrenched inflation.

Weakness in these figures will signal that the last 13 months of tightening is finally making its impact felt throughout the economy at large and future rate hikes could be paused.

DO NOT bet the farm on Rate Cuts no matter what the TV analysts say. Look, I’d love to be wrong about this, and will admit if I am, BUT JUST 3 WEEKS AGO Jerome Powell stated abundantly clearly that “rate cuts are not in our base case”…So even though there are pundits and economists calling for the Fed to start cutting sometime this year….what we have been told point blank is that rate cuts aren’t even on the table at this time. Maybe we’ll look back at this in the future an celebrate that we were wrong…maybe. And this week’s inflation readings are expected to weigh heavily on whether or not we can point and laugh at how wrong I was…of if we take another victory lap. As for me, I’ll be out buying new running shoes this weekend.

So what does this all mean for mortgage rates Andy?

Mortgage rates got better at the beginning of last week but it was a short week, and that short week ended up with the mortgage backed security market going back up on Good Friday. Expect that this week you will see price changes to reflect that, since markets were technically closed on Friday.

We are 100% in the needs-based market. If you are unsure what you should be doing over the next 12 to 24 months with your property, please let us know when we can discuss this with you to create a game plan that best suits your family’s personal financial needs.

For those of you looking to purchase a home in 2023 there are new programs coming about that might help ease your entry into home ownership. If you have not yet scheduled your pre-approval appointment with William or with Brian please send us a direct message or contact them directly so that we can help you best prepare for home ownership this year. You will still see that there is mild buyer competition but in general less and less overbidding and fighting over one another to get into homes.

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