Mortgage Rates

With the CPI and PPI reports coming up this week, the previous week was light on reports of any significance. Most notable was the Non-Farm Payrolls which can have an outsized impact on inflation data reporting, as it’s a useful barometer to compare the cost of goods to the payroll of the average consumer. Following that is the ISM Manufacturing Index which came in slightly under expectations. Lastly, the JOLTS Job Openings is a minor indicator, but useful for seeing the state of the job market.

Non-Farm Payrolls

Wages are growing by about 4%. The Federal Reserve wants to see annual worker pay increase slow to 3% or less to help the central bank return U.S. inflation to low pre-pandemic norms. However, it’s not seeing much progress lately.

JOLTS Job Openings

The number of job openings in the U.S. sank in April to a more than three-year low of 8.1 million, another sign the labor market is cooling off as the economy slows.

ISM Manufacturing Index

A key barometer of U.S. factories fell to a three-month low as new orders waned and businesses were reluctant to invest due to high interest rates. “The manufacturing side of the economy appears to have stalled,” said Timothy Fiore, chairman of the Institute for Supply Management’s manufacturing index.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing a decrease by -0.07% with the current rate at 6.29%
• 30-Yr FRM rates are seeing a decrease by -0.04% with the current rate at 6.99%

MND Rate Index

• 30-Yr FHA rates are seeing a decrease by -0.11% for this week. Current rates at 6.64%
• 30-Yr VA rates are seeing a decrease by -0.12% for this week. Current rates at 6.65%

Jobless Claims

Initial Claims were reported to be 229,000 compared to the expected claims of 220,000. The prior week landed at 221,000.

What’s Ahead

With the CPI and PPI data releases this week, the rest of the week is very light on other data. All eyes are on the most defining inflation data reports across all markets. The Federal Reserve may have its favorite with the PCE Index, but many others, including lending partners, prefer to use the CPI and PPI as their barometer for inflation.

The Federal Reserve’s preferred inflation data, the PCE Index, was the highlight of this week. These were followed up loosely by trade balance, retail inventories, and GDP — all of which are strong secondary indicators for current inflation.

For lending partners and those affiliated with broader markets, inflation is the key determining factor for rate adjustments, and other data at this point has a nominal impact in comparison. It does appear the Federal Reserve wants to have a strong hand towards inflation and will be careful about cutting rates even this year. 

The broader market is holding such expectations as well. As a side note, the Federal Reserve’s Beige Book still shows signs that the economy is going strong, but businesses are showing reservations about the current interest rates.

PCE Index

April PCE shows the smallest increase in ‘core’ inflation this year. Prices in the U.S. rose again in April, the Federal Reserve’s preferred PCE index found, but a recent surge in inflation in early 2024 may have also shown signs of fading. The PCE index rose 0.3% last month, the government said Friday. Economists polled by The Wall Street Journal had forecast a 0.3% gain.

Federal Reserve’s Beige Book

A Federal Reserve survey found that the U.S. economy expanded in the late spring, but persistent inflation, high interest rates, and political uncertainty caused businesses to turn “somewhat more pessimistic.” The latest findings in the Beige Book suggest the economy is unlikely to speed up until inflation slows further and the Fed can cut high U.S. interest rates.

GDP

The U.S. economy grew at a lackluster 1.3% annual pace in the first three months of the year, revised figures show, largely because of softer consumer spending that could herald a broader slowdown in the economy. The increase in gross domestic product, the official scorecard for the economy, was the smallest in almost two years. Previously the government reported that GDP had expanded at a 1.6% rate in the first quarter.

Consumer Confidence

The U.S. index of consumer confidence rebounded to 102 in May from a revised 97.5 in the prior month, the Conference Board said Tuesday. This is the first increase in the index after three straight monthly declines.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing an increase by 0.12% with the current rate at 6.36%
• 30-Yr FRM rates are seeing an increase by 0.09% with the current rate at 7.03%

MND Rate Index

• 30-Yr FHA rates are seeing an increase by 0.05% for this week. Current rates at 6.75%
• 30-Yr VA rates are seeing an increase by 0.05% for this week. Current rates at 6.77%

Jobless Claims

Initial Claims were reported to be 219,000 compared to the expected claims of 218,000. The prior week landed at 216,000.

What’s Ahead

We should expect several interim reports; and while they do not impact inflation data the most, they are still relevant. The top reports will come from Non-farm payrolls and unemployment numbers. The more minor reports will be shown in the manufacturing data with PMI and ISM numbers. The next CPI and PPI release is the week after that, which also has the largest impact on rate decisions, even if the Federal Reserve would like to use the PCE Index as their preferred data.

The Consumer Sentiment Report was the sole important report to take place the prior week, keeping with the trend of the cooling-off period that happens the weeks following the CPI and PPI data releases.

Consumer sentiment this time around has come to be slightly below expectations and falling to a 6-month low, marking a great change in overall sentiment towards the clear trend in rising costs in goods and services. It is largely expected that the Federal Reserve, even with the recent improvement in data, will maintain its stance at holding rates at the current position until a later date this year.

Consumer Price Index

A monthly gauge of U.S. consumer sentiment fell to its lowest level in six months in May on expectations of higher inflation, according to a survey released Friday. The second of two readings of the consumer-sentiment index was 69.1 in May, a sharp decline from 77.2 in April, the University of Michigan said. The final reading was slightly higher than the initial estimate of 67.4.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing a decrease by -0.04% with the current rate at 6.24%
• 30-Yr FRM rates are seeing a decrease by -0.08% with the current rate at 6.94%

MND Rate Index

• 30-Yr FHA rates are seeing an increase by 0.08% for this week. Current rates at 6.70%
• 30-Yr VA rates are seeing an increase by 0.08% for this week. Current rates at 6.72%

Jobless Claims

Initial Claims were reported to be 215,000 compared to the expected claims of 220,000. The prior week landed at 223,000.

What’s Ahead

Next week is the Federal Reserve’s preferred inflation metric PCE Index Prices, but the more impactful metric has largely always been the CPI and PPI reports. There will also be the release of the Chicago PMI report which will headline manufacturing data and the current state of the manufacturing industry. Tailing up the two major reports is the Federal Reserve’s beige book.