Market Matters – June 12, 2021 Edition

June 12, 2021
/ Austin Horseshoe Bay Lakeway Ranches Ranches $1-1.5 Million Texas Texas Coastal Bend Texas Hill Country Texas Lakes and Rivers Texas Ranches For Sale
/ By Michael Brown

We have seen a nice push lower, with the 10-year at 1.435%. This is a bit surprising as we head into summer, we have the reopening trade and inflation running hotter than expected. Part of the issue may be that with the weaker than expected jobs number last Friday, we have traders on the wrong side of the trade and they are having to unwind their positions, driving the 10-year even lower. The 10-year is definitely looking overbought here technically, although stochastics haven’t crossed yet so there may be some more momentum to carry this even lower. That said, we still wouldn’t be shocked to see at least see some consolidation as we have traveled a good distance this week and are bound to run out of momentum at some point.

Initial Jobless Claims

Initial Jobless Claims dropped -9k to 376k for the week ending June 5th vs. the prior week’s unrevised level of 385k. This is now the lowest level since mid-March 2020, while it is also the sixth consecutive week of declines. The 4-week moving average was 402.5k, which is down by -25.5k from the prior week’s unrevised average of 428k. Continuing claims, which lag by a week, fell by -258k for the week of May 29th, down to 3.499mln from the revised handle of 3.757mln (orig. 3.771mln).

Consumer Price Index

CPI for May posted hotter than expectations, seeing a +.6% rise on headline, with the ex-food/energy core index up +.7%. Looking at the YoY figures, headline CPI rose from +4.2% to +5.0%, while the core rose from +3.0% to +3.8%. The headline print represents the largest YoY gain since the +5.3% increase back in August 2008, with the core reading at the fastest pace since May 1992. Within the data for May, used cars and trucks prices continued to rise, up +7.3% MoM and up +29.7% YoY. The energy index was mostly flat on the month, although the gasoline index is up +56.2% YoY, which takes the energy index up +28.5% YoY. Food prices continued their charge higher as well, matching April’s gain of +.4%. Looking YoY however, food prices have not been nearly as volatile, only up +2.2%. Other sectors seeing monthly gains include airfares +7.0%, car and truck rental prices +12.1%, transportation +2.0%, lodging up +.4%, housing +.4%, apparel +1.2%, recreation +.2%, and education +.3%.

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JOLTS Report

According to the Labor Department JOLTS report, there were 9.3mln job openings on the last day of April. This was an increase of 998k from the prior month, and the most on record since the data began tracking in 2000. Looking back at the prior month, March’s level was revised to 8.288mln from 8.123mln. Back to the April data, hires were little changed at 6.1mln, with total separations up to 5.8mln. Within those separations, the quits rate reached a high of 2.7%, while the layoffs and discharges rate decreased to a low of 1%. Job openings increased in several industries with the largest increases in accommodation and food services (+349k), other services (+115k), and durable goods manufacturing (+78k). The number of job openings decreased in educational services (-23k) and in mining and logging (-8k).

Mortgage Applications

The MBA mortgage applications index declined -3.1% for the week ending June 4th. Purchase applications fell -11% and were -24% lower than the same week last year. Refinance applications declined -5.0% and were -27% lower than the same week a year ago. “Most of the decline in mortgage rates came late last week, with the 30-year fixed-rate mortgage declining to 3.15 percent. This likely impacted refinance applications, which fell 5 percent for both conventional and government loans. With fewer homeowners able to take advantage of lower rates, the refinance share dipped to the lowest level since April,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications were up slightly last week, and the large annual decline was the result of Memorial Day 2021 being compared to a non-holiday week, as well as the big upswing in applications seen last May once pandemic-induced lockdowns started to lift.” Added Kan, “The average loan size on a purchase application edged down to $407,000, below the record $418,000 set in February, but still far above 2020’s average of $353,900. Home-price growth continues to accelerate, driven by favorable demographics, the recovering job market and economy, and housing demand far outpacing supply.”

We feel bearish on the market as the 10-year is at 1.454%. We have resistance at 1.39%, while we have support at 1.464%, then at 1.52. The market has rallied this past week, so, it is definitely a good time to get a few loans locked in.

Call today to discuss this week’s market trends.

Pam Jamison

Loan Originator

NMLS# 277012

8310-1 N. Capital of Texas Highway, Suite 195, Austin, TX 78731

512-775-1001 | 512-582-8778

pam.jamison@primelending.com |

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