Orion’s brokers know that mortgage rates have been more or less treading water as we moved through May and into June. You also know that politics, the stimulus packages, and the pandemic are all at play, impacting stocks, bonds, and home buyers. And housing prices continue to be moved by land and permit costs lack of housing stock inventory, and soaring commodity prices like lumber. Regardless of the economic news that the government and other entities send out, the pandemic still rules. Let’s check in with some recent economic news and see what you should know about what is moving rates.
The nation has reached a point in this economic recovery where the data is being influenced by many variables is it has clearly become more difficult for economists to predict how the reports will shake out. We learned that Retail Sales were flat in April after their 10.7 percent March surge, which was not what economists were expecting, but still maintained their stimulus driven gains and were 18 percent above their pre-pandemic high in February 2020. Big ticket items remain difficult to acquire as ongoing supply and labor shortages create backlogs which are likely to continue in the near-term. The Federal Reserve likes to see a little inflation, not a lot, but analysts are waiting to see if this information was a “one shot” deal or if it is a trend. Therefore the news didn’t shake the markets.
Industrial product increased in April although it would have likely been a bit higher if not for the headwinds facing the global supply chain as demand for finished goods is still very strong. The gap between labor supply and demand was highlighted by the fact that the job openings rate was a record 5.3 percent in March while the hiring rate was 4.2 percent.
The unemployment data that came out last Friday was not optimistic, and in fact its weakness caused a rally in bond prices and a drop in yields. And an improvement in mortgage rates.
But perhaps most importantly, in a move to encourage more potential workers to return to work, nine states have moved to reduce the enhanced unemployment benefits enacted during the pandemic. The pandemic is still ruling the markets. So while weekly or monthly economic data is good to follow, Orion’s brokers should know that any statistical information that comes out has, and will continue to do so, be judged in the broader vision of coming out of the pandemic.