The July Personal Consumption Expenditures report met expectations. July personal income was also right in line with estimates, increasing the most over the last four months. Core inflation year over year at 2.9%. The highest since last February.
On a monthly basis, energy was off 1.1% and food was down 0.1%. Services prices rose 0.3%, essentially accounting for all of the monthly increase as goods decreased 0.1%. Inflation numbers were held in check by a 2.7% annual decline in prices for energy goods and services. Food prices rose 1.9% from a year ago. The balance also tilted heavily toward services prices, which jumped 3.6%, compared to just a 0.5% increase on goods.
The initial reaction was subdued. The Fed has one more key data points prior to the September 17th Federal Open Market Commitee meeting which is the August employment report next Friday. Consensus remains the Fed will cut their key rate at the meeting, but after that it is questionable. Last night Fed Governor Waller spoke, voicing his support for a 25-basis point rate cut in September, adding that he would not support a larger cut unless the August jobs report shows a significant deterioration in the labor market.
The July US trade deficit was higher than estimates at $103.8B against $87.7B forecasts.
At 9:45 am the August Chicago purchasing managers index fell to 41.5.
PRICES @ 10:00 AM
10 year note: 4.24% +3 bp
5 year note: 3.72% +2 bp
2 year note: 3.65% unch
30 year bond: 4.92% +4 bp
30 year FNMA 6.0: @9:30 am 102.08 -8 bp (-6 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 103.60 -1 bp (-2 bp from 9:30 am yesterday)
30 year GNMA 6.0: @9:30 am 101.85 -8 bp (-9 bp from 9:30 am yesterday)
Dollar/Yen: 147.16 +0.21 yen
Dollar/Euro: $1.1664 -0.0021
Dollar Index: 98.06 +0.25
Gold: $3,481.80 +$7.50
Bitcoin: 109,726 -2199
Crude Oil: $64.38 -$0.22
DJIA: 45,518 -119
NASDAQ: 21,508 -197
S&P 500: 6467 -34
Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.
At 8:30 am ET this morning weekly jobless claims were estimated at 230K, reported a 229K while the prior week revised from 235K to 234K. The prior week claims were the highest in eight weeks, continuing jobless claims fell by 7,000 from the near three-year high on the prior week to 1,954,000. The results do not reflect an accelerating deterioration in the US labor market but held the lingering concern of softening amid slower hiring.
Also at 8:30 am, the preliminary Q2 GDP, the second look after the advance release last month, the advance release showed GDP +3.0% this report expected at 3.1% but reported at 3.3%. Q2 personal consumption expenditures expected at +1.4% increased 1.6%. After Q1 GDP declined 0.1% the increase is implying the economy remains resilient, a great headline but mainly due to stronger consumer spending and investment, though partly offset by lower government spending and higher imports. Growth was driven by strong household spending and fewer imports. Declines in business investment and exports held back even stronger gains. The Q2 price deflator remained unchanged from the advance release at +2.0%. The current Atlanta Fed’s GDPNow that fluctuates with each key economic release is presently forecasting Q3 GDP at 2.2%.
The initial reaction to the two 8:30 am releases did not have an impact on rates; at 9 am the 10 year note traded unchanged from yesterday, MBS prices at 9 am unchanged from yesterday.
At 9:30 am the DJIA opened quietly +46, NASDAQ +48, S&P +8. 10 year at 9:30 am unchanged at 4.24%. FNMA 6.0 30 year coupon at 9:30 am -1 bp from yesterday’s close and +6 bps from 9:30 am yesterday.
At 10 am July pending home sales, expected at +0.2% from -0.8% in June, sales declined 0.4%.
At 1 pm Treasury will auction $44B of 7 year notes; yesterday the 5 year auction was weak with continued less demand from foreign investors.
10 year note: 4.23% -1 bp
5 year note: 3.71% unch
2 year note: 3.64% +2 bp
30 year bond: 4.90% -2 bp
30 year FNMA 6.0: @9:30 am 102.14 -4 bp (+6 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 103.62 -2 bp (+4 bp from 9:30 am yesterday)
30 year GNMA 6.0: @9:30 am 101.94 -6 bp (+6 bp from 9:30 am yesterday)
Dollar/Yen: 147.19 -0.21 yen
Dollar/Euro: $1.1665 +$0.0027
Dollar Index: 98.02 -0.21
Gold: $3,460.30 +$11.70
Bitcoin: 113,053 954
Crude Oil: $63.88 -$0.27
DJIA: 45,481 -84
NASDAQ: 21,541 -49
S&P 500: 6470 -11
Powell’s Jackson Hole speech was clear; the Fed is likely to cut their key rate next month but future cuts are dependent on inflation and employment. Powell commented that inflation is currently at 2.9% and employment is still at 4.2%, a respectable level. The bellwether 10 year note over the last two weeks has ranged from 4.33% to 4.26%.
This morning, the report on weekly MBA mortgage applications for last week declined 0.5%. The purchase index increased 2.2% but re-fis slipped 3.5%. “Prospective buyers appear to be less sensitive to rates at these levels and are more active, bolstered by more inventory and cooling home-price growth in many parts of the country,” said Joel Kan, an MBA economist.
This afternoon at 1 pm Treasury will sell $70 Billion in 5 year notes. Yesterday there was solid demand for the 2 year note.
There are no more economic releases today. Tomorrow the weekly jobless claims are expected at 230 thousand, 5 thousand less than last week. Friday we get July inflation data from the Bureau of Economic Analysists.
10 year note: 4.28% unch
5 year note: 3.75%unch
2 year note: 3.65% +1 bp
30 year bond: 4.92% +2 bp
30 year FNMA 6.0: @9:30 am 102.08 -3 bp (+4 bps from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 103.58 -2 bp (+4 bp from 9:30 am yesterday)
30 year GNMA 6.0: @9:30 am 102.00 unch (+10 bps from 9:30 am yesterday)
Dollar/Yen: 148.11 +0.68 yen
Dollar/Euro: $1.1585 -$0.0057
Dollar Index: 98.60 +0.38
Gold: $3,427.70 -$5.30
Bitcoin: 111,269 +128
Crude Oil: $63.47 +$0.22
DJIA: 45,488 +70
NASDAQ: 21,510 -34
S&P 500: 6466 unch
Neutral
Powell's pivot promises housing market hope
With the housing market having held its breath for months for news of better interest rates, Fed Chair Jerome Powell recently delivered exactly what weary homebuyers and sellers needed to hear, even though the full impact may take time to unfold.
Powell's Jackson Hole speech late last week marked a pivotal moment, signaling the Fed’s readiness to shift gears on multiple fronts. Realtor.com’s Jake Kimmel reports that the immediate catalyst is a changing economic landscape where the "balance of risks appears to be shifting." While inflation continues running above the Fed's target at 2.9% for core PCE (tariff effects are still accumulating), the labor market is showing clear signs of softening. “Job growth is slowing,” says Kimmel. “Fewer people are participating in the workforce, and unemployment has crept up to 4.2%.”
With upward price pressures competing against employment concerns, financial markets are already betting on a September rate cut. Powell was, however, careful to emphasize that monetary policy isn't following a predetermined script, saying the Federal Open Market Committee will continue making decisions based purely on incoming economic data, keeping their options open as conditions evolve.
More significant than any single rate cut, however, is Powell's willingness to make all this sound like a fundamental philosophical shift. “The Fed is abandoning its 2020 strategy of flexible average inflation targeting, returning instead to a simpler approach better suited for today's economic realities,” says Kimmel. “This new framework acknowledges that both inflation and employment risks deserve equal attention, and it clarifies how the central bank will balance these competing priorities when they pull in different directions.”
The practical meaning is what might be referred to as profound, with the Fed now more willing to act against labor market weakness, even when inflation remains slightly elevated. In the big scheme of things, this signals a more balanced approach to their dual mandate of price stability and maximum employment, and it moves away from the singular focus on inflation that dominated recent years.
With all this in play, mortgage rates are due to show genuine improvement to affordability calculations for potential buyers — after years of punishing borrowing costs that severely eroded consumers' purchasing power and left this summer particularly frustrating for everyone involved in real estate transactions.
The longer-term implications of Powell's framework shift could prove even more valuable for housing markets, according to Kimmel. “If this new approach successfully reduces economic uncertainty and stabilizes rate expectations, it could restore the consumer confidence that housing markets desperately need,” he says, reminding us that uncertainty has been perhaps the biggest enemy of real estate activity. Buyers and sellers have struggled to time their decisions amid volatile and unpredictable conditions.
Going forward, the key to jumpstarting housing market activity this fall and beyond will be tamping down this economic uncertainty. Kimmel says potential buyers need confidence that they're not catching a falling knife when they purchase homes, while sellers need assurance that market conditions won't deteriorate further if they list their properties.
Powell's more balanced approach to monetary policy may provide exactly the kind of stability the market has been thirsting for. Instead of dramatic swings between fighting inflation and supporting employment, the new framework suggests more measured, predictable responses to economic conditions. “This predictability is crucial for major financial decisions like home purchases, where buyers need confidence about future payment obligations and property values,” says Kimmel.
But none of this will happen overnight. Mortgage rates alone won't solve affordability challenges. What Powell's Jackson Hole speech does represent, however, is a meaningful shift toward policies that recognize housing's critical role in the broader economy. By committing to balance employment and inflation concerns across the board, the Fed is acknowledging that economic stability requires attention to real-world impacts on American families, including their ability to achieve homeownership.
Realtor, TBWS
How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Neutral
Mortgage rates are moving sideways. The MBS market improved by +25 bps last week. This may have been enough to decrease mortgage rates or fees. The market experienced high volatility last week.
This Week's Rate Forecast: Neutral
These are the three things that have the greatest ability to impact rates this week. Inflation, The Fed and Domestic Data.
1) Inflation: We get the Fed's preferred measure of inflation on Friday with PCE and Core PCE. On the last report it rose by 0.2% and it is expected to rise by 0.3% this time.
2) The Fed: Now that Fed Chair Powell has opened the door for a September rate cut and perhaps a cycle of slow and steady cuts, we will be paying close attention to this week's speakers.
3) Domestic Data: The releases that will get the most weight by bond traders will be Consumer Confidence and revisions to GDP. There will also be PMI, Durable Goods Orders, Consumer Sentiment and Initial Jobless claims.
Treasury Auction: There will also be Treasury Auctions on Tuesday, Wednesday and Thursday.
This Week's Potential Volatility: High
This morning markets are treading water. Volatility has started low but will increase later this week when we get key data.
Bottom Line:
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
Markets rallied on Powell’s speech last Friday, the keynotes were he almost admitted a rate cut at the FOMC meeting next month and his comments that the Fed may have to reconsider its polices in light of inflation well above its 2.0% target. The employment sector based on recent data is slowing, although at 4.2% is still within the Fed’s comfort range for the moment. Weekly jobless claims increased last week more than expected and continuing claims continue to increase. The Fed’s key inflation reading will hit on Friday, the estimates are generally unchanged from June.
Stock indexes jumped Friday, the DJIA +846, NASDAQ +396. Interest rates declined, the 10 year note down 6 bps, the 2 down 8 bps and MBS prices increased 29 bps from Thursday. This morning no follow-through, the 10 year note at 8:30 am +2 bps, stock index futures the DJIA -139, NASDAQ -90.
At 9:30 am the DJIA opened -90, NASDAQ -39, S&P -10. 10 year at 9:30 am 4.29% +3 bps. FNMA 6.0 30 year coupon at 9:30 am -6 bps from Friday’s close and -1 bp from 10:45 am Friday’s 23 bp gain.
10 year note: 4.29% +3 bp
5 year note: 3.79% +2 bp
2 year note: 3.73% +3 bp
30 year bond: 4.91% +2 bp
30 year FNMA 6.0: @9:30 am 101.96 -6 bp (-1 bp from 10:45 am Friday)
30 year FNMA 6.5: @9:30 am 103.43 -9 bp (unch from 10:45 am Friday)
30 year GNMA 6.0: @9:30 am 101.85 -6 bp (+2 bp from 10:45 am Friday)
Dollar/Yen: 147.41 +0.47 yen
Dollar/Euro: $1.1705 -$0.0013
Dollar Index: 97.92 +0.20
Gold: $3,411.40 -$7.10
Bitcoin: 112,213 -1366
Crude Oil: $64.37 +$0.71
DJIA: 45,519 -113
NASDAQ: 21,479 -17
S&P 500: 6455 -12
“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell signaling a possible rate cut at the September Federal Open market Committee meeting. He didn’t speak directly about the President's push to lower rates but said it is important for the Fed to remain independent. Powell continued to point to the tariffs increasing inflation which is still an issue for inflation forecasts.
Powell said the Fed is going to adopt a long-term policy and possibly increasing the inflation target. The shifting of the balance of inflation forecasts may be warranted. He also said prices have been increasing due to tariffs but the price increases may be short-lived.
There isn’t any more news today for markets to digest.
PRICES @ 10:45 AM
10 year note: 4.27% -6 bp
5 year note: 3.77% -9 bp
2 year note: 3.70% -9 bp
30 year bond: 4.89% -3 bp
30 year FNMA 6.0: @10:45 am 101.97 +23 bp (+22 bp from 9:30 yesterday)
30 year FNMA 6.5: @10:45 am 103.48 +17 bp (+14 bp from 9:30 yesterday)
30 year GNMA 6.0: @10:45 am 101.83 +18 bp (+22 bp from 9:30 yesterday)
Dollar/Yen: 146.95 -1.42 yen
Dollar/Euro: $1,1704 +$0.0097
Dollar Index: 97.89 -0.72
Gold: $3,418.30 +$36.70
Bitcoin: 115,890 +3740
Crude Oil: $63.83 +$0.32
DJIA: 45,638 +853
NASDAQ: 21,513 +413
S&P 500: 6473 +1.02
At 8:30 am ET weekly jobless claims were expected at 224K unchanged from the previous week, claims increased to 235K. It was the sharpest one-week count in eight weeks. Continuing claims increased by 30 thousand to 1.972 million above estimates of 1.960 million. The employment sector is slowing; hiring is less robust over the last few weeks and will filter into what Powell may say tomorrow morning.
Also at 8:30 am, the August Philadelphia Fed business index thought to be +8.0 from 15.9 in July declined to -0.3. It usually doesn’t draw much interest though.
The Jackson Hole symposium is underway this morning. Out of the box Kansas City Fed president Jeffrey Schmid expressed doubt about lowering rates in September, saying policymakers still have more work to do on inflation. He was interviewed by CNBC and didn’t show a lot of interest in cutting rates. “We’re in a really good spot, and I think we really have to have very definitive data to be moving that policy rate right now,” “In September, we’ll get around tables and we’ll collaborate, and we’ll figure it out, but yeah, I think there’s a lot to be said between now and September.” His remarks didn’t move the bond market. The CME’s FedWatch still pricing in a nearly 80% chance of a quarter percentage point reduction at the September 16-17 FOMC meeting. Schmid also commented on mortgage applications becoming too excessive with paperwork… amen to that.
The debate continues, yesterday former PIMCO CEO and Allianz chief economic advisor Mohammad El Arian commented that the Fed’s 2% inflation target is too low, and the Fed is too dependent on data and said Powell is too backward viewing.
At 9:30 am the DJIA opened -194, NASDAQ -99, S&P -29. 10 year note 4.31% +1 bp. FNMA 6.0 30 year coupon at 9:30 am -2 bps from yesterday’s close and +2 bp from 9:30 am yesterday.
At 9:45 am August preliminary PMI manufacturing and service indexes. The manufacturing index thought to be 49.7 increased to 53.3, the service index estimates were 53.0 reported at 55.4. July manufacturing index 49.5, services 55.2.
At 10 am July existing home sales expected at 3.900 million from 3.930 million; reported at 4.01 million.
Powell has an opening here; he can mumble his well-worn words without tipping the scales. He can go on with inflation fears and slowing labor markets and markets can continue to believe the Fed will move on September 17th with uncertain outlooks and lower rates, but it is conjecture and must be backed by two very key releases between now and the meeting. Next Friday July PCE inflation report and on September 5th and the August employment report, both will determine whether the Fed moves or doesn’t, in the meantime its all speculation.
10 year note: 4.33% +3 bp
5 year note: 3.85% +3 bp
2 year note: 3.79% +2 bp
30 year bond: 4.93% +3 bp
30 year FNMA 6.0: @9:30 am 101.75 -2 bp (+2 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 103.34 unch (-1 bp from 9:30 am yesterday)
30 year GNMA 6.0: @9:30 am 101.61 unch (+1 bp from 9:30 am yesterday)
Dollar/Yen: 147.63 +0.30 yen
Dollar/Euro: $1.1639 -$0.0012
Dollar Index: 98.33 +0.11
Gold: $3,382.80 -$6.70
Bitcoin: 113,433 -848
Crude Oil: $62.59 -$0.62
DJIA: 44,709 -229
NASDAQ: 21,058 -115
S&P 500: 6377 -18
We have a quiet start this morning ahead of the FOMC minutes this afternoon. At the long end of the curve at 8:30 am ET the 10 year note and 30 unchanged, at the mid and short end the 2 and 5 yields down 1 bp. Stock indexes began flat.
There is no economic data today. Weekly MBA mortgage applications declined 1.4% after increasing 10.9% the prior week, purchase apps +0.1%, refinance apps -3.1% from +23.0% the prior week.
At 1 pm the Treasury will auction $16B of 20 year bonds, recent auctions have been meeting with soft demand.
At 2 pm the FOMC minutes from the July meeting is today’s feature. Traders and investors looking for additional insights about what the Fed was thinking then. With Powell on Friday the focus is less than normal.
At 9:30 am the DJIA opened +60, NASDAQ -51, S&P -4. 10 year at 9:30 am 4.31% unchanged. FNMA 6.0 30 year coupon at 9:30 am unchanged from yesterday and -1 bp from 9:30 am yesterday.
10 year note: 4.29% -1 bp
5 year note: 3.81%-2 bp
2 year note: 3.75% -1 bp
30 year bond: 4.90% -1 bp
30 year FNMA 6.0: @9:30 101.73 unch (-1 bp from 9:30 yesterday)
30 year FNMA 6.5: @9:30 103.35 +1 bp (unch from 9:30 yesterday)
30 year GNMA 6.0: @9:30 101.60 -1 bp (-4 bp from 9:30 yesterday)
Dollar/Yen: 147.34 -0.32 yen
Dollar/Euro: $1.1663 +$0.0014
Dollar Index: 98.17 -0.10
Gold: $3,386.40 +$27.70
Bitcoin: 113,170 +61
Crude Oil: $63.19 +$0.84
DJIA: 44.898 -24
NASDAQ: 21,052 -263
S&P 500: 6374 -37
No news overnight as the markets wait for what Powell has to say Friday morning, in the meantime there isn’t anything on the calendar that concerns traders and investors. The Ukraine/Russia cease fire talks are continuing although there is little likelihood of any significant announcements. It is all about what the Fed may do now. How Powell frames it in his speech is what traders are awaiting for. The consensus remains for a cut next month but as usual, the closer markets get to reality the less sure they become. Powell faces inflation well above the Fed’s 2.0% target (2.8% now) and the employment market remaining firm.
July housing starts and permits at 8:30 am ET, starts exploded much higher than was expected at 1.428 million against estimates of 1.290 million and June starts revised from 1.321 million to 1.358 million. Starts were carried by housing with five or more units for a second month (11.6% to 470K), faster than starts of one unit (2.8% to 939K). Starts at a 5 month high increasing 5.2%. Permits thought to be 1.390 million reported at 1.354 million. Permits fell by 2.8%, the lowest level since June 2020. Permits for buildings with five or more units dropped by 9.9% to an annualized rate of 430K, while single-family permits increased by 0.5% to 870K.
Not withstanding some unexpected news there is little likelihood anything will change much until Powell speaks on Friday morning. There isn’t any scheduled economic releases this week that can sway markets. The next key inflation data is a week from this Friday when July PCE data hits.
At 9:30 am the DJIA opened +74, NASDAQ -58, S& -9. 10 year 4.32% -2 bp. FNMA 6.0 30 year coupon at 9:30 am +1 bp from yesterday’s close and -6 bps from 9:30 am yesterday.
10 year note: 4.31% -3 bp
5 year note: 3.83% -3 bp
2 year note: 3.75% -2 bp
30 year bond: 4.91% -2 bp
30 year FNMA 6.0: @9:30 am 101.74 +1 bp (-6 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 103.35 -2 bp (-8 bp from 9:30 am yesterday)
30 year GNMA 6.0: @9:30 am 101.64 -3 bp (-10 bp from 9:30 am yesterday)
Dollar/Yen: 147.71 -0.17 yen
Dollar/Euro: $1.1675 +0.0013
Dollar Index: 98.08 -0.09
Gold: $3,383.30 +$5.30
Bitcoin: 115,160 -1198
Crude Oil: $62.71 -$0.71
DJIA: 45,057 +145
NASDAQ: 21,538 -92
S&P 500: 6444 -5
America’s great standstill
“Go west, young man.” When newspaper man Horace Greeley used those words long ago, he was talking about opportunity. Mobility. He would not, however, have applied them to today’s economic snapshot. Why? Because according to Wall Street Journal’s Konrad Putzier and Rachel Ensign, Americans are experiencing their lowest mobility rates in recorded history.
The journalists speak of the economic ripple effects that threaten the nation's traditional dynamism. “Only 7.8% of Americans moved in 2023, the lowest rate since Census records began in 1948, compared to roughly 20% who moved annually in the 1950s and ‘60s.”
None of this is the result of a single factor, however. The frozen housing market is creating a cascade of problems; growing families cannot upgrade their homes, empty-nesters cannot downsize, and first-time buyers remain locked out entirely.
Many homeowners secured favorable mortgage terms around the time of the pandemic, when rates were low. Now? They know they may never get that deal again and are staying put. Moving to a larger home could easily double monthly payments, even for families desperate for more space.
You wouldn’t think today’s job market would be a factor, but you’d be wrong. Remember that post-pandemic hiring boom — back when workers could name their price? Well, the employment landscape has cooled dramatically. “A measure of hiring, quits, and layoff activity across white-collar industries fell to its lowest level since 2009,” say the journalists. “The probability of switching employers in any given month has dropped from 2.8% in the late 1990s to 2.3% in the 2020s.”
They refer to it as an "insider-outsider divide,” where current employees cling to their positions while new graduates struggle to break into the workforce. All those kids still giddy from throwing their graduation caps in the air? Right now they are underemployed — more than three times as likely to remain underemployed a decade later compared to those who quickly secure good jobs.
Putzier and Ensign use the case of a recent University of Pennsylvania engineering graduate who applied for more than 200 jobs, accumulating credit card debt while living with his girlfriend's family. Oh, he did get an offer at last. But it required relocation to another state — without assistance and offering a salary insufficient for the move. So he declined. Eventually, he found local work, but his experience illustrates what today’s opportunity snapshot looks like.
The journalists found that expensive housing discouraged so many workers from relocating for better jobs that it weighed on U.S. gross domestic product. “When people cannot move for job offers or to cities with better opportunities, they typically earn less. When companies cannot hire talent from different states, corporate productivity and profits suffer.”
Why all this at once? First off, the U.S. population has aged, and older people move less frequently. More households are now dependent on two earners, making relocation more challenging. The biggest drop, however, has occurred in local moves within the same county, which have declined roughly 47% over the past three decades, according to the journalists.
But what, you may ask, about the pandemic-era surge in relocations to the suburbs and remote areas, where workers could buy a home at half the price while enjoying a healthy remote worker income? Temporary. “Despite well-publicized stories of urban flight, the overall trend toward decreased mobility continued,” says this report. By 2024, movement rates remained near historic lows.
Housing affordability, of course, plays a major role. The journalists point out that for much of the 2010s, a median-income family buying a median-priced home spent 30% or less of their earnings on housing costs. That share has now jumped to 39%.
This mobility crisis particularly impacts young workers as they attempt to launch careers. The promise that college degrees guarantee employment has proven to ring hollow for many recent graduates who find themselves overqualified for available positions, yet unable to access better opportunities elsewhere.
For generations, Americans chased opportunity by moving between cities and states. Companies were once quick to hire and fire compared to their international counterparts. But like a plane whose engine just stalled, many people are in a surreal freefall — trapped in unsuitable housing, unsatisfying jobs, or extended family arrangements while searching for work.
As hiring has disappointed and GDP growth has slowed, the connection between mobility and prosperity is evident. Without renewed movement in both the housing and job markets, America risks losing a key competitive advantage that has historically driven innovation and growth.
WSJ, TBWS
Mortgage rates are moving sideways today. The MBS market worsened by -6 bps last week. This was not enough to increase mortgage rates or fees. The market experienced high volatility last week.
These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Geopolitical and 3) Domestic News.
1) The Fed: This week is the Jackson Hole Economic Symposium. We will hear from every single member of the FOMC this week and get a speech from Fed Chair Powell at the end of the week to close out the symposium. We will also get the Minutes from the last FOMC meeting on Wednesday.
2) Geopolitical: The financial markets are watching to see what happens with the meeting with Ukranian President Zelensky Monday and what can be worked out with Russia after last week's meeting with Putin.
3) Domestic News: We have a very light week for meaningful economic data. We have a lot of housing news but that is not something that will move the needle on rates. The 20Y Treasury bond auction is the most significant calendar event.
This morning markets have started under a little pressure. Volatility has started at moderate levels but will likely increase later in the week.