Friday Market Update for the Week of April 9th 2021

Happy Friday, Brian Manning here with another weekly update. Let’s get right to it.

So Monday of this week was a relatively quiet news day, Tuesday of this week, we got data from CoreLogic. So Core Logic measures home appreciation across the United States. And this is a report for the month of February. So on a year-over-year basis, home appreciation up 10.4%, which is phenomenal, and just still great to see a very robust housing market. In the month of February alone home appreciation was up 1.2%, which is just a blockbuster number and just crazy to see.

Thursday of this week, we got initial jobless claims. So this is new people filing for unemployment, that number was up at 744,000 people. So that’s two weeks in a row, we’ve unfortunately seen a little bit of a rise there. You know, still, kind of the question is with unemployment, where it is, and the availability of the extension and the increased amount of unemployment, when you have 7.4 million job openings in the US and you’re seeing unemployment applications rising, you know, the question that’s still there, is that, you know, is it better for some people stay at home and not work and receive unemployment than it is to work? So I don’t know the answer. But it’s unfortunate to see the unemployment claims continuing to rise.

Also Thursday of this week, we had Jerome Powell speaking the president of the Federal Reserve, and pretty much just said, everything’s gonna remain the same, they’re going to keep rates at their near zero level, continue their bond buying, you know, I don’t envy the Federal Reserve in their position right now,because we’re in the face of seeing inflation start to rise. And normally, when inflation rises, the Federal Reserve combats that by raising rates, but they’re saying, you know, hey, we don’t want to do this, we’re gonna stay on track for keeping rates near zero level and we’re going to continue with our bond buying, which is probably correct, because later in the year, you’re likely going to see inflation be tamed and come back down. But it’s kind of a challenging spot for them to be in right now.

Speaking of inflation, today we got the PPI report. PPI is the producer price index, this is a gauge of inflation at the wholesale level. And PPI, which doesn’t always get a tremendous amount of respect, but right now it is because we’re starting to see some movement there.On a month-over-month basis on the headline number, it was up 1% and the core rate was up 7/5th of a percent. So Core rate strips out volatile items such as food and energy. So that’s a pretty strong increase. What’s crazy is that on a year-over-year basis, the headline number was up 4.2%, and the core rate was up 3.1%. So that’s a pretty big increase of inflation.The challenge that we’re going to have, though, is that these numbers only look at a year-over-year basis, are replacing numbers that we had for inflationary readings in the year 2020. And at this time, in 2020, the nation was very much in a lockdown. So inflationary numbers, whether it’s wholesale or retail in the in the month of April for the year of 2020, those are really low numbers. So we’re likely going to continue to see inflationary numbers increasing now in the months of May, June and July. We’ve talked about this in the past. But the bond markets are not loving it.

Also, China released the PPI report today and China’s PPI was up 4.4%. So we’re just kind of seeing some inflationary pressures at the bond markets are not loving. Looking at the 10-year treasury and we’ve been looking at this for a little while now because mortgage rates generally go in the direction of what the 10-year treasury is doing, you know, we’ve kind of been in thistrading range here that we’ve been looking at.But even with the information that we have coming out, you know, the 10 year treasury has not really been able to convincingly break below this 25 day moving average and moving into next week,and specifically, next Tuesday, we have some more inflationary data coming outSo, you know, hopefully we don’t see this 10 year yield go much higher,but I would definitely say,you know, we’d want to be in a locking stance right now because unfortunately, there is some room to the upside here with the 10 year treasury. I wouldn’t be running to lock in right now,but I would be locking especially before next Tuesday, because I think next Tuesday, you’re gonna see some inflationary reports come out specifically through the CPI when this is going to show exactly what we said was going to happen in the months of April, May, June, July, we’re gonna see more and more inflationary pressures but interest rates are still phenomenal.

I’ve been doing this for 23 years and interest rates are amazing. We’re still helping people buy houses, at incredibly low rates and still refinancing for so many different reasons. So if you have any questions, you want to get pre-approved, you just want to run some scenarios by me, give me a call.

I’m available all weekend. Call me on my cell phone, text me. Whatever works for you is good for me.

Happy Friday. Have a great day!