CCL Market Update: JOLTS report, FOMC Minutes, Consumer Spending & Credit, Housing Outlook, Mortgage Rates

The Labor Department released their Job Openings and Labor Turnover Survey (JOLTS) on Tuesday, reporting that job openings rose 0.5% in May to a record 5.363 million, up from 5.335 million in April. Within the report, the quits rate was unchanged at 1.9%, and the layoff rate decreased one tenth to 1.2%. The hiring rate also dropped one tenth to 3.5%, which may tell of the increasing difficulty of finding qualified employees in certain fields.

Within the minutes released from the most recent Federal Open Market Committee meeting, it was evident that although there were differing opinions regarding voting for a rate hike, most members wanted to see greater employment growth and upward pressure on inflation. The increasingly uncertain risks associated with Greece and China were also discussed. The minutes reporting stabilization in the dollar, as well as in energy prices, adding to inflation, which policy-makers saw rising to their 2% goal. Based on the minutes, the outlook for a rate hike seems to be moving more toward December as opposed to September.

According to Gallup’s Consumer Spending Measure, Americans’ self-reported daily spending averaged $90 for the month of June. This reading relatively unchanged from May and April, and is consistent with June averages from both 2014 and 2013. The past few years have also displayed a pattern of spending increases between June and July, which could very well happen again this year. Consumer credit is showing some life with consumer borrowing rising $16.1 billion in May, following a $21.4 billion increase in April. Revolving credit increased by $1.6 billion in the month, and non-revolving credit, inflated by the student loan subcomponent, increased by $14.5 billion.

In its June 2015 Economic Housing Outlook, Fannie Mae’s Chief Economist suggests that total housing starts and total home sales in 2015 should rise about 10 and 5 percent, respectively. Freddie Mac also published its June 2015 U.S. Economic and Housing Market Outlook. The outlook suggests there will be growth in home prices and home sales. The cash share of home sales are also expected to decline within the next two years.

Mortgage Rates

Mortgage rates for the majority of loan programs have retreated slightly over the past week. The 30-year conventional rate dropped 1/8 percentage points to 4.000% (4.040% APR) on July 8, and is averaging about 1/4 percentage points lower than the year-ago rate. The high balance, manufactured conventional, 30-year FHA, VA, and USDA programs also displayed rate decreases ranging from 2.5 to 12.7 basis points. The 15-year conventional, jumbo, FHA 203k, and manufactured FHA loan programs all remained unchanged from the previous week.

Sean Becketti, chief economist for Freddie Mac, commented that the decline in rates is likely a result of investor concerns regarding the financial turmoil occurring in Greece and China.

“In addition,” he noted, “the minutes of the June meeting of the Federal Open Market Committee suggest the Federal Reserve will proceed cautiously—monitoring events both overseas and in the U.S. to ascertain the appropriate moment to begin raising short-term interest rates. As a result, mortgage rates may remain in the neighborhood of 4 percent for a while.”

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