Financial Report

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.

Following the release of the PCE Index figures, which the Federal Reserve prefers as its key inflation metric, the data indicates a slight increase in inflation for the third quarter. Nonetheless, market sentiment remains unchanged, and the prediction that the Federal Reserve is on track to implement rate cuts this year holds firm. Saddled along with the PCE Index, we also have the Personal Income & Spending reports which have indicated the economy is still expanding, and the GDP estimates have also corroborated the reports with their own solid pre-release numbers. 

PCE Index

Prices in the U.S. rose slightly in June in another confirmation that inflation has slowed again, keeping the Federal Reserve on track to cut high U.S. interest rates in the next few months. The Fed’s preferred PCE index edged up 0.1% last month, the government said Friday. That matched the forecast of economists polled by The Wall Street Journal.

Consumer Spending

Consumer spending rose a mild 0.3% in June to help keep the U.S. economy expanding at an above-average speed. Households spent more on travel, recreational goods, medicine, and utilities amid a summer heat wave, government data showed.

GDP (Pre-release)

So much for the U.S. economy shedding most of its surprising strength from last year. Gross domestic product, the official scorecard of the economy, expanded at an above-average 2.8% annual pace in the second quarter, the government said Thursday. Economists polled by The Wall Street Journal had forecast a 2.1% increase. GDP grew twice as fast as it did in the first quarter when the economy expanded at a 1.4% rate.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing an increase by 0.02% with the current rate at 6.07%
• 30-Yr FRM rates are seeing an increase by 0.01% with the current rate at 6.78%

MND Rate Index

• 30-Yr FHA rates saw no change for this week. Current rates at 6.32%
• 30-Yr VA rates saw no change for this week. Current rates at 6.34%

Jobless Claims

Initial Claims were reported to be 235,000 compared to the expected claims of 235,000. The prior week landed at 245,000.

What’s Ahead

All eyes are on the FOMC rate decision this upcoming week. The only notable release for this week outside of the rate decision meeting is the Non-farm Payroll numbers, which are a greater figure for the state of consumer spending power, and whether income is keeping pace with inflation.