This week, the most important release of the year regarding inflation data will occur. Once again the CPI and PPI take the front stage clearing the way for rate cuts made by the Federal Reserves. Based on several indicators, there is strong confidence that if the upcoming inflation data meets expectations, we could see interest rate cuts before the year ends. In addition to the inflation data, the Consumer Credit reports will be released early this week. Both lending partners and the broader market have high expectations for these reports.
The previous week’s employment data also had a lot of positive things to say, with wages growing faster than inflation. The overall economic outlook has been positive.
U.S. Trade Deficit
The U.S. international trade deficit widened 7.9% in July to $78.8 billion from a revised $73 billion in the prior month, the Commerce Department said Wednesday. This is the largest monthly trade gap since June 2022.
Federal Reserve Beige Book
Nine out of 12 Federal Reserve regional districts reported flat or declining economic activity in August, according to the central bank’s so-called Beige Book report released on Wednesday. That’s up from five districts that reported weak conditions in the last report in mid-July. The four districts that have experienced weaker conditions than in the prior report appeared to be Philadelphia, Richmond, Atlanta, and St. Louis.
U.S. Employee Earnings
Real average hourly earnings for all employees increased 0.1 percent from June to July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.2 percent in average hourly earnings combined with an increase of 0.2 percent in the Consumer Price Index for All Urban Consumers (CPI-U).
Primary Mortgage Market Survey Index
- 15-Yr FRM rates are seeing a decrease of –0.04% with the current rate at 5.47%
- 30-Yr FRM rates saw no change this week with the current rate at 6.35%
MND Rate Index
- 30-Yr FHA rates are seeing a –0.15% decrease for this week. Current rates at 5.67%
- 30-Yr VA rates are seeing a –0.14% decrease for this week. Current rates at 5.69%
Jobless Claims
Initial Claims were reported to be 232,000 compared to the expected claims of 230,000. The prior week landed at 228,000.
What’s Ahead
The upcoming CPI and PPI reports are the most critical releases of the year and will play a decisive role in shaping the interest rate cuts for the remainder of the year.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.