Financial Report

The results are in, and both the CPI and PPI inflation reports confirm that inflation has come in lower than expected, surpassing expectations. This is a great result leading forward for the next FOMC Rate Decision meeting, as there is high optimism now that the rate cuts are coming this year. With next week’s FOMC Minutes guiding the next meeting, we can expect to hear their stance going forward. We also see a matching indicator in Retail Sales, showing a significant gain across the board, while auto sales had the largest increase in one and a half years. This aligns with previous consumer confidence reports and will serve as a good reference when making the next rate decision for the Federal Reserve.

Consumer Price Index

Inflation stays mild; the 2.9% annual pace is at its lowest since March 2021. The bulk of inflation in July was concentrated in housing; accounting for 90% of the increase in the consumer price index. Energy and food were on the tamer side. Energy prices were flat and the cost of food rose 0.2%.

Producer Price Index

In July, the Producer Price Index (PPI) for final demand increased by 0.1 percent.eh Prices for final demand goods moved up 0.6 percent, and the index for final demand services fell 0.2 percent. Over the 12 months ending in July, the overall prices for final demand increased by 2.2 percent. Wholesale inflation shows few warning signs. Fed interest-rate cut is still on track.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing an increase by 0.03% with the current rate at 5.66%
• 30-Yr FRM rates are seeing an increase by 0.02% with the current rate at 6.49%

MND Rate Index

• 30-Yr FHA rates are seeing a 0.01% increase for this week. Current rates at 6.10%
• 30-Yr VA rates are seeing a 0.02% increase for this week. Current rates at 6.12%

Jobless Claims

Initial Claims were reported to be 227,000 compared to the expected claims of 234,000. The prior week landed at 233,000.

What’s Ahead

With only the FOMC Minutes coming up next week, the rest of the week has a notably light schedule. However, the regular weekly reports are still expected to be delivered as usual.

With so little in the way of data releases following the previous week’s FOMC Rate Decision, we’re left with a small release schedule with Consumer Credit and U.S. Trade Deficit rounding up the reports. While relatively light indicators of the current health of the economy, they are still useful for determining more impactful trends in the future. Next week, the inflation data reports with the CPI and PPI are the ones to look out for. This time, these are the ones that will largely determine whether we see rate cuts this year, and lending partners have already been lowering rates in anticipation.

U.S. Trade Deficit

The trade deficit fell by 2.5% in June and receded from a 19-month high, owing to higher exports of aircraft and U.S.-produced oil and gas. The deficit dropped to $73.1 billion in June from $75.0 billion in May, government data showed.

Consumer Credit

Consumers increased the amount of credit they used in June at a slower rate, in a sign of rising financial stress on U.S. households. Consumer credit rose by a modest $8.9 billion in June, Federal Reserve data showed. Economists had expected a $9.7 billion increase, according to a Wall Street Journal forecast.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing a decrease by -0.36% with the current rate at 5.63%
• 30-Yr FRM rates are seeing a decrease by -0.26% with the current rate at 6.47%

MND Rate Index

• 30-Yr FHA rates are seeing a -0.01% decrease for this week. Current rates at 6.09%
• 30-Yr VA rates are seeing a -0.02% decrease for this week. Current rates at 6.10%

Jobless Claims

Initial Claims were reported to be 233,000 compared to the expected claims of 240,000. The prior week landed at 250,000.

What’s Ahead

As we head towards the last quarter of the year, next week will unveil one of the most important inflation data reports of the year. The Federal Reserve has kept a tight lip on whether it intends to cut rates this year, but they have repeatedly said it was predicted based on inflation data. With the last two releases showing favorable results in achieving their goal, it has fueled speculation that rate cuts are on the horizon.

The Federal Reserve’s decision to maintain the current interest rates has paved the way for a potential rate cut in September. While this news has been met enthusiastically by lending partners, the broader markets have indicated a slightly less warm reception despite both the data and Federal Reserve’s intentions being a match. Until September, we can expect a lull in significant data releases, with more substantial decisions anticipated then.

FOMC Rate Decision

Powell stated that the Federal Reserve seeks “a little more confidence” that inflation is consistently trending downward before taking action. The Federal Reserve’s benchmark short-term interest rate now stands at 5.25% to 5.5%. Although consumer prices spiked briefly in the first few months of the year, causing the Federal Reserve to hesitate, inflation has since calmed.

Consumer Confidence 

The index of consumer confidence rose to 100.3 in July from a revised 97.8 in the prior month, the Conference Board said Tuesday. Economists polled by the Wall Street Journal had forecast the index would slip to 99.5 in July.

U.S. Hourly Wages

Wages rose a mild 0.2% last month. The increase in pay over the past year slowed to 3.6% from 3.8% in the prior month and is returning close to pre-pandemic levels.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing a decrease by -0.08% with the current rate at 5.99%
• 30-Yr FRM rates are seeing a decrease by -0.05% with the current rate at 6.73%

MND Rate Index

• 30-Yr FHA rates saw a -0.22% decrease for this week. Current rates at 6.10%
• 30-Yr VA rates saw a -0.22% decrease for this week. Current rates at 6.12%

Jobless Claims

Initial Claims were reported to be 249,000 compared to the expected claims of 235,000. The prior week landed at 235,000.

What’s Ahead

Last week was tense as everyone anticipated the Federal Reserve’s decision to maintain interest rates. This week, apart from the usual unemployment data, there are only minor releases like the US Services PMI and Consumer Credit Reports, which aren’t expected to have a significant impact.