Non-Farm Payrolls rise more than expected. U.S. Stocks rise. Kohl’s to begin hiring seasonal holiday workers.

The Bureau of Labor Statistics reports that Non-Farm Payrolls rose by 213,000 in June, above the 195,000 expected. April and May were revised higher by a total of 37,000. The Labor Force Participation Rate edged higher to 62.9 from 62.7 as more Americans entered the labor force. On the negative side of the data, average hourly earnings came in at 0.2% from the 0.3% in May, year-over-year was recorded at 2.7%, unchanged. The U6 number, or total unemployed, rose to 7.8% from 7.6%. The Unemployment Rate rose to 4.0%. Overall, it was a good report.
U.S. Stock markets pushed higher on Friday after the June Jobs Report was released. On Thursday night, Washington imposed $34B in tariffs on imported goods from China as the trade issues continue. Howerver, concerns about the conflict escalting have capped equity prices from futher gains. U.S Stocks were modestly higher in mid-morning trading.
Holiday hiring in July! Say it isn’t so! Recently, Kohl’s announced that it will be hiring seasonal workers for the back-to-school, fall and holiday shopping months earlier than ever before. With a tight labor market, Kohl’s feels it will be getting a jump on top talent before they’re gobbled up by the other retailers. We are hiring seasonal associates earlier than ever to ensure our teams are fully staffed, trained and ready to support peak shopping seasons,” Ryan Festerling, executive vice president of human resources at Kohl’s, said in a statement.

Home prices continue to rise. Many homeowners’ mortgage rate is less than current rates. Renters looking to purchase a home.

Home prices continue to rise due in part to a shortage of homes for sale on the market. CoreLogic reports that home prices, including distressed sales, rose 7.1% from May 2017 to May 2018, up 1.1% month over month from April to May. Looking ahead, CoreLogic forecasts that home prices will rise 5.1% from May 2018 to May 2019. From May 2018 to June 2018, prices are expected to increase by 0.3%.
CoreLogic also reported that during the first quarter of 2018, about 50% of all existing homeowners had a mortgage rate of 3.75% or less. May’s mortgage rates averaged a seven-year high of 4.6%, with an increasing number of homeowners keeping the low-rate loans they currently have, rather than sell and buy another home that would carry a higher rate. In closing, CoreLogic states that despite high home prices, renters want to get out of their rental property and purchase a home.

Mortgage rates decline. Confidence in housing market hits a four-year high. Weekly Initial Jobless Claims remain at multi-decade lows.

Mortgage rates declined over the past week and have now decreased in four of the past five weeks. Rates hit their high water mark at the end of May due in part to an improving economy and modestly higher inflation pressures. Freddie Mac reports that the 30-year fixed-rate mortgage fell to 4.55% this week with an average 0.5 in points and fees. Freddie Mac said that the economy and housing market overall are on solid footing this summer, which should support continued strength in housing demand.
A new survey conducted by Chase Home Lending and Pulsenomics show record highs among U.S. homeowners and renters in three key areas; market conditions, aspirations for homeownership and expectations regarding home values and affordability. The Chase Housing Confidence Index (HCI) systematically measures and tracks key dimensions of consumer confidence in housing markets across the United States using data collected in the U.S. The survey revealed that both homeowners and renters agree that now is a good time to buy and sell a home. The Chase Housing Confidence Index hit 66.3 for the national average with levels above 50 being positive.
Americans filing for first time unemployment benefits continue to hover near lows seen in the early 1970s, as the labor market is now at or near full employment. Weekly Initial Jobless Claims rose 9,000 in the latest week to 227,000. The less volatile four-week moving average of claims, which irons out seasonal abnormalities, edged higher to 222,000 from 221,000. The June Jobs Report will be released Friday, July 6.

Rising costs keeps renters away from their ideal locations. Home prices continue to rise. Gas prices edge lower.

A recent survey conducted by RENTCafe shows that 83% of renters are kept away from their ideal locations and jobs due to rising rent costs. Nationally, the average rent charged by buildings in top-rated locations is $1,655 per month, 37% more than the national average rent of $1,211 charged in lower-rated locations. The survey showed that the “ideal location” for most renters is near their job; close to friends or family; or near attractions such as entertainment, dining, shopping or a gym.
Home prices continued their winning ways in April due in part to an improving economy, low home loan rates and a low supply of homes for sale on the market. The S&P CoreLogic Case-Shiller 20-City Home Price Index rose 6.6% from April 2017 to April 2018, slightly lower than the 6.8% expected. From March to April, the 20-City Index was up 0.2% month over month. Seattle, Las Vegas and San Francisco continue to report the highest year-over-year gains among the 20 cities.
Gas prices at the pumps have edged lower in the latest week as motorists head into next week’s 4th of July celebration. The national average price for a regular gallon of gas is $2.85, five cents cheaper than a week ago, 12-cents less than a month ago and 58-cents more than a year ago. Motor Club AAA said that prices should edge a bit lower in late summer or early fall.

Renewed China tariff woes push Stocks lower. Fed raises rates, consumers feel the pinch. Mortgage lenders profit margins decline.

Renewed tariff woes with China are helping the U.S. Bond markets today while pushing the Dow Jones Industrial Average, S&P 500 and the NASDAQ lower as the week comes to an end. President Trump has approved tariffs on $50 billion worth of Chinese goods imported into the U.S. An official announcement is expected later today. The closely watched Dow Jones Industrial Average was down nearly 300 points in early trading.

The Federal Reserve raised its benchmark short-term Fed Funds Rate this week, but what does that actually equate to for the U.S. consumer? The consumer will see a hike on rates for credit cards, home equity lines of credit, auto loans and other adjustable-rate instruments. In addition, student loan rates will creep higher while savings rates for banks will edge higher, but not by much.

Fannie Mae reported this week that mortgage lenders reported a net-negative profit margin outlook for the seventh consecutive quarter due in part to rising home prices and a tight supply of home for sale on the market. Tight supplies continue to put a squeeze on mortgage demand. “Lenders remain bearish this quarter as they continue to face headwinds from rising mortgage rates, tight supply, and strong home price appreciation, which have drastically reduced refinance activity and restrained home purchase affordability,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

Housing sentiment continued to strengthen in May. Now is a good time to sell a home. Next week’s Fed meeting has capital markets at a standstill.

Housing sentiment continued to strengthen in May, but high home prices complicate consumer purchase confidence, reports Fannie Mae. Higher home prices are due in part to limited inventories of homes for sales on many markets across the nation. The Fannie Mae Home Purchase Sentiment Index (HPSI) rose 0.6 points in May to 92.3, reaching a new all-time survey high for the second consecutive month. The net share of respondents who reported that now is a good time to sell a home increased to 46% in May, and is now up 14 percentage points year over year. However, the net share of those surveyed said now is a good time to buy, decreased to 28%, showing little improvement in the past 12 months.

Not much action in the U.S. capital markets today as the investing world sits on their hands awaiting next week’s Fed decision and monetary policy statement. Currently, there is a 90% chance of a 0.25% hike to short-term Fed Funds Rate. The Federal Open Market Committee meeting begins Tuesday and ends Wednesday at 2:00 p.m. ET with the rate announcement and statement. The Fed will also release economic projections while Fed Chair Powell will hold a press conference at 2:30 p.m. ET.

Economic growth projected slightly lower than first reported. No bank failures so far in 2018. Fed meeting kicks off next week.

The National Association for Business Economics (NABE) feels the Tax Cut & Jobs Act will boost economic growth in 2018 and 2019, but the U.S. could fall into a new recession in 2020. NABE expects 2.8% Gross Domestic Product this year, slightly lower from its 2.9% reported in March. The slightly less optimistic view is due in part to the trade policies that could have a negative impact on the economy. The current economic expansion began in mid-2009 and is currently the second longest in U.S. history and will be the longest if it continues past June 2019.

There were no U.S. bank failures during the first five months of 2018, the first time this has occurred since 2006. Ultimately, there were no bank failures in 2006, the last calendar year when that happened. Since 2007, 531 banks have failed, an average of 48 per year over the last 11 years.

The two-day Federal Open Market Committee (FOMC) meeting will kick off its regularly scheduled meeting next week, June 12-13. It is expected that the meeting will end on Wednesday with a quarter-point hike in the short-term Fed Funds Rate (FFR). The Fed Funds Rate is the rate at which depository institutions lend reserves held at the Federal Reserve to other depository institutions overnight. The FFR influences everything from home and auto loans to credit cards along with lenders’ Prime Rates.

 

Fed could raise rates more aggressively if economy heats up. Current U.S. economic expansion is in a tie for the second longest since June 2009. Gas prices continue to push higher.

This morning, the Federal Reserve Bank’s Loretta Mester (voter, hawk) says the Fed could raise rates more rapidly if the U.S. economy grows faster than expected, though it could go slower if inflation weakens. Ms. Mester went on to say that she doesn’t see inflation picking up sharply this year. The Fed’s favorite inflation gauge, the annual Core PCE, is at 1.9%, not far off the Fed’s target of 2%. Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.

The National Bureau of Economic Research (NBER) recently reported that the current economic expansion in the U.S. is in a tie for the second longest in history dating back to June 2009. In addition, the number of consecutive months of labor market gains is the longest ever as of April. The NBER went on to say that the 3.9% Unemployment Rate recorded in April was the lowest since late 2000. The NBER also reported that the number of job openings hit 6.6 million in March, the highest since the Labor Department started tracking the number in December 2000.

Gas prices at the pumps continued to rise to start the week as the summer driving season gets set to kick off in a few weeks. In addition, the recent announcement from the White House to withdraw from Iranian nuclear deal had a hand in driving up oil prices. Motor Club AAA reports that the headlines from Washington along with the switchover to summer blend gasoline and growing global demand are also factors fueling the rise in gas prices. The national average price for a regular gallon of gasoline is at $2.87, up 6 cents in the latest week and up 53 cents from a year ago.

Consumer prices tame. Core inflation eases. Mortgage rates unchanged in the latest week.

Consumer prices cooled a bit in April after spiking early in the year, helping to ease rising inflation fears. The numbers revealed an uptick in energy and food prices which was offset by a decline in demand for used cars and trucks. The Bureau of Labor Statistics reports that the headline Consumer Price Index (CPI) rose 0.2% in April, just below the 0.3% expected and still down from the 2018 high of 0.5% recorded in January.

The so-called Core CPI, which strips out volatile food and energy, rose 0.1%, below the 0.2% expected. On a 12-month basis, CPI rose 2.5%, up from the 2.4% in March, while the Core rate increased 2.1%, unchanged from the March reading. The members of the Federal Reserve will be dissecting the data but it does regard the Core Personal Consumptions Expenditures (PCE) as its favorite inflation gauge. The annual Core PCE was last reported at 1.9%, right near the Fed’s 2% target.

Mortgage rates were steady in the latest week, and while they have risen in 2018, rates still remain historically attractive. Freddie Mac reports that the 30-year fixed-rate mortgage was unchanged this week at 4.55% with an average 0.5 point added on top. Freddie Mac says as we head into late spring, the demand for purchase credit remains rock solid, which should set us up for another robust summer home sales season. In addition, while this year’s higher rates, which are up 50 basis points from a year ago, have put pressure on the budgets of some home shoppers, weak inventory levels are what’s keeping the housing market from a stronger sales pace.

Survey shows no housing affordability crisis. U.S. Stocks fall. Mortgage rates slightly lower this week.

A recent survey by First American Financial Corp. reveals that there is no housing affordability crisis. One of the reasons given in the survey is that while home prices have been increasing, so have incomes. The report went on to show that most states have reached their peak home price at 2007 levels, while incomes are much higher than they were in last decade.

U.S. Stocks are lower today as investors remain on edge about the U.S.-China trade talks coupled with less than impressive corporate earnings released this morning. Treasury Secretary Mnuchin is in Beijing today spearheading two days of trade talks between the two countries. The closely watched S&P 500 has fallen below a key technical level, which is ushering in more selling.

Mortgage rates edged slightly lower this week after three straight weeks where borrowing costs have risen, after being in an upward pattern since the year began. Freddie Mac reports that the 30-year fixed-rate mortgage fell three basis points to 4.55% with an average 0.5 in points and fees. Despite the higher rates this year, Freddie Mac reports that its data through April shows that first-time home buyers represent 46% of purchase loans, up from 43% over the same period a year ago.