John’s Finance Corner: A Week of Economic Ebb and Flow
As a Senior Loan Officer, I keep my eye on the bond markets and mortgage rates, especially last week, which was particularly eventful. Following the Presidential Debate, we observed an initial surge in the 10-year treasury and mortgage rates. This was a ripple effect from Japan’s financial challenges, as they grapple with their currency, leading to a decrease in US treasury purchases.
The debate also sparked discussions among hedge fund managers, with some expressing concerns over the potential election outcome. The possibility of new tariffs on imports, as suggested by Donald Trump, could introduce inflationary trends, affecting treasury bonds early in the week.
The job reports we received throughout the week provided a clearer picture. The private sector reported job openings at a three-year low, with a decrease of 1.1 million from last year. The ADP jobs report showed an increase of 150,000 jobs in June, which was below expectations. The Challenger Job-Cut Report indicated that there were 48,786 layoffs in June, the highest for the month since 2009.
The BLS jobs report on Friday showed an increase of 206,000 jobs in June, which was above expectations. However, the report also included a downward revision of 111,000 jobs from the previous two reports, suggesting that the initial data was not as robust as published.
The unemployment rate’s slight increase from 4.0% to 4.1% may seem negligible, but it’s significant. It matches the highest rate projected by 16 of the 19 Fed Members for this year. With half the year remaining, we could see unemployment rates surpassing the Fed’s projections.
This development could lead the Fed to reconsider their outlook on the job market and the economy. An increase in the unemployment rate could hasten the discussion of interest rate cuts later in the year. While cuts are unlikely this month, the Fed’s meeting in September might bring about the first rate reduction.
The upcoming week is packed with data that will shed light on the economy. Fed Chairman Powell’s speech, a 10-year treasury auction, and the release of CPI inflation data and jobless claims will all play a role in shaping the bond and mortgage rates.
As a Senior Loan Officer, I advise clients to stay informed and prepared for potential shifts in the market. Although we anticipate a bumpy ride, there’s a chance for a slight decline in rates by the end of the week, depending on the data we receive.
Stay tuned for more updates!
John Lamberg
Senior Loan Officer
Mobile 727.366.9947
Website ccm.com/john-lamberg
Email [email protected]
