Markets On Edge
Happy Friday! Brian Manning with the weekly update. Let’s get right to it.
This week, one thing moved markets, and that is oil. When oil moves, mortgage rates move with it. Oil shocked everything early this week, exploding to $119 a barrel. But why? Tensions in the Middle East and disruptions in the Strait of Hormuz—one of the most important shipping routes on Earth. Markets hate uncertainty, and mortgage rates moved higher.
Then, all of a sudden, there was a reversal a few days later. Oil dropped down to $90 a barrel. Why? Because shipping resumed through the Strait of Hormuz. Speaking of which, we then had a global release of oil reserves—a sign that maybe the conflict is cooling and everything is settling down.
But the story doesn’t end there. Then we got more volatility because, all of a sudden, reports of tanker attacks hit the news. Oil jumped again, markets swung, and mortgage rates moved higher. The bottom line right now is that energy markets are moving everything, and volatility comes from that.
Then we get inflation. We got a couple of different inflation reports this week. Inflation is coming down slowly, but it’s stubborn. Core inflation is still running hot; it’s at around 3% right now, which is definitely above the Fed’s 2% target. One bright spot, though, is housing inflation, specifically lodging away from home and rents. This is the smallest rent increase that we’ve seen in years, and that’s really important because this is a huge driver in the inflation report.
Meanwhile, housing shows some strength. Existing home sales beat expectations and were higher than expected. Mortgage applications for new purchases were up 8%, which is good to see. First-time homebuyers increased in the market as well. Inventory is still 17% below the pre-pandemic level, so housing everywhere is looking really good for us.
Then we got some feedback on the economy regarding GDP. This was revised lower to seven-tenths of a percent, which actually helped the bond market because it showed a little bit of a slowing in GDP. Then we look at job openings; they came in a little bit stronger than expected. We’ll have to wait and see what happens because this is a report that comes out every single week.
Looking ahead to next week, we have a big week with the Federal Reserve meeting on Wednesday. Nobody’s expecting a rate change there, but markets around the world are going to watch. So right now, I’m watching three things very closely: oil, inflation, and the Federal Reserve. What’s going to happen? We’ll have to wait and see.
I’m around all week, and if you have any questions, let me know. I’m available seven days a week, 8 to 8.
Agents, we got a brand new class rolling out starting next week Thursday at the Capital Grille in Denver: “Just List. Just Sell. Just Win.” Please RSVP soon, as it is almost sold out. If you can make it, we’d love to have you there.
Happy Friday, and have a great day!
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