Weekly Briefs: Short Week, A Ton Of News
Mortgage rates reach 2023 peak. Oil prices drop. Fed wants more rate hikes.
Numbers:
Treasury yield curve inversion approached a multi-year extreme. Treasury yield curve has been a closely watched indicator of a recession:
Mortgage rates reached their 2023 peak: the average 30 year mortgage rate just hit 7.22%:
Yet, the median home sale price has only slightly decreased. Housing affordability is becoming a bigger issue as those who locked in a lower rate are unwilling to sell; and those who are looking for a new home may no longer qualify for a mortgage.
The labor market is still strong despite showing signs of cooling. Total nonfarm payroll employment increased by 209,000 in June, and the unemployment rate changed little at 3.6 percent, reported BLS. The U.S. added less jobs than expected, which marks the first jobs number miss in 1.5 years.
Manufacturing activity in the U.S. continues its downward trend, the longest one in 14 years. We are seeing a faster rate of contraction in the manufacturing sector as companies produce less due to the weak demand; while optimism about the second half of 2023 continues to weaken.
News:
Despite seasonal expectations, oil prices continue to decline. On Monday, Saudi Arabia and Russia agreed to decrease oil production by 1 million barrels per day. Even though demand remains soft, oil prices are expected to go up as the result of increasing interest rates. This is due to the fact that rising interest rates are causing oil traders to de-stock and sell off physical barrels, a trend that analysts predict will lead to a significant surge in oil prices later this year, according to OilPrice.com.
Lorie Logan, Dallas Federal Reserve President, pushed for more rate increases:
"Both inflation and the labor market came in hotter than expected over the first half of 2023. The continuing outlook for above-target inflation and a stronger-than-expected labor market calls for more restrictive monetary policy."
Additionally, Lorie Logan mentioned that significant real estate risks remain - these are the risks that could result in a 2008-style crisis, if not worse. You are welcome to watch a detailed video to learn more about the details here.
Enjoy your weekend! Thank you for stopping by!
- Lena