Monday Mortgage Minute – NOW THE FED IS UNDER MORE PRESSURE
Remember last week when Andy said that there were two big, REALLY BIG things happening?….Jerome Powell AND Jobs!
First off, Jerome Powell testified in front of the Senate Banking committee Tuesday March 7th and Wednesday March 8th . He pretty much sounded like he was reading off the same set of notes from the last Fed Press Conference. He said things like – We will have to hold rates higher than initially expected, for longer than expected and sustain them until we see inflation returning to the 2% target…I mean how many months in a row is this going to continue?!?! I get it, they’re not making traction in the ways they need to, and he’s not gonna reveal any new secrets prior to the meeting coming up next week, but man, the repeated canned commentary is just not helping inspire confidence that we’re heading in the right direction.
Second was Labor and Jobs
- JOLTS continues to be bipolar month after month. North of 11 million one month, then below 11 million the next…then north of 11 million again, and back below 11 million…In my opinion, It’s way too unpredictable to continue as a major variable in Fed policy moving forward. {shrug} But what do I know?….maybe they have a job opening coming up 😉
- ADP Non-Farm Payroll came in super-hot, well above the forecast and even the previous moniths number. So even though we want there to be more job growth like this is indicating, the Fed wants more UNEMPLOYMENT in order to squash demand so that people will stop spending money at these elevated levels. It’s the ONLY WAY inflation has a chance at returning to their target.
- Unemployment wes higher/lower than expected. Again, this reading has the Fed’s attention as it relates to the future because of the aforementioned “demand destruction” strategy.
- average hourly earnings were better/worse than expected but what’s most important is the long term readings COMPARED to inflation. If hourly pay can keep up with the elevated costs, then the problems for the Fed persist as wage earners are able to cope with sustained high prices.
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This week, the most important things happening are all coming at us like a firehose. THIS IS the week before the next Big Fed meeting and rate announcement, so this data will all be considered vital leading up to the March 22nd Fed Rate announcement.
Tuesday starts us off with: Month over month CPI, year over year CPI and the Fed favorite – Core CPI
Wednesday we get month over month PPI, month over month CORE PPI, month over month CORE retail sales, and month over month retail sales…But wait! how could there be more? The Empire state manufacturing index ALSO comes out, which we thought wasn’t a big deal last month but turned out to be a really bad sign for the markets. Wednesday is a big one.
Thursday we’re watching Building permits and housing starts closely hoping for positive readings in BOTH of those. Unemployment also comes out and has been pretty erratic lately and in contrast to what the Fed wants to see happening.
Finally, Friday we have preliminary consumer sentiment, and preliminary inflation expectations readings. It sure would be nice for both of these to reflect some sort of positivity coming into the week before the fed rate announcement. The markets and the economy at large could use some good news right about now.
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So what does all this mean for mortgage rates Brian? You can expect mortgage rates to be flying around all over the place this week. With SO MUCH data coming out AND it being the week before the big fed announcement, you should not expect this week to be smooth sailing.
Weeks like this are where your preparation, communication, and execution all work in your favor. If you have a lock a loan this week, you should stick REAL close to your loan officer and be ready to strike IF and WHEN rates take a midday nosedive.
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