The week after the inflation data reports was expected to be relatively quiet, with the most significant event being a meeting with Federal Reserve Chairman Jerome Powell. He remained tight-lipped about when rate cuts would happen, but given his demeanor, he did not deny that rate cuts were on the way — simply that he would not indicate when they would arrive. This has only confirmed to lending partners and the broader market that they were right to feel optimistic that rate cuts are possible before the end of the year.

There were a few cyclical reports released, with the Economic Indicators report taking the lead and the Federal Reserve’s Beige Book being among the highlights.

Economic Indicators

The leading index for the economy fell again in June for the fourth month in a row, reflecting a slowdown in U.S. growth since the beginning of the year. The privately run Conference Board said the index slid 0.2% last month. The index had fallen for two straight years before briefly turning positive in February.

Federal Reserve’s Beige Book

U.S. economic activity seemed to soften in the past two months, with five of the Federal Reserve’s 12 regions reporting flat or declining activity, a Fed survey released Wednesday found. That is three more weak districts than were reported in the last survey, in May.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing a decrease by -0.12% with the current rate at 6.05%
• 30-Yr FRM rates are seeing a decrease by -0.12% with the current rate at 6.77%

MND Rate Index

• 30-Yr FHA rates are seeing an increase by 0.07% for this week. Current rates at 6.32%
• 30-Yr VA rates are seeing an increase by 0.08% for this week. Current rates at 6.34%

Jobless Claims

Initial Claims were reported to be 243,000 compared to the expected claims of 229,000. The prior week landed at 223,000.

What’s Ahead

Next week, the government will release the Consumer Confidence Report and the total U.S. employment data. Both of these reports should provide insights into the state of the economy and consumer sentiment.

With lofty expectations, the CPI delivered a lower-than-expected inflation increase, leading to a positive uptake across many lending partners and markets. However, the PPI was on the opposite end of that, with a higher-than-expected inflation rate increase, muting the positive response from the CPI data release.

The outlook for a rate cut this year has changed, making the potential for it highly likely. Even Jerome Powell, who usually has a more hawkish response regarding rate cuts, is now leaving some room for this possibility. With the outlooks in favor of a rate cut, we’re seeing the impact across many markets as the potential change for rates is reduced long term.

Consumer Price Index

The cost of consumer goods and services fell in June for the first time since the pandemic in 2020, affirming a recent slowdown in inflation that could impel the Federal Reserve to cut high U.S. interest rates in the next few months. The consumer price index fell 0.1% last month after no change in May, the government said Thursday. That’s the first drop since May 2020 at the height of the pandemic when the economy was mostly shut down.

Producer Price Index

Wholesale costs rose slightly faster than expected in June, but not enough to counter a recent string of reports showing inflation has slowed again. The Producer Price Index advanced 0.2% last month, the government said Friday. That was a touch faster than Wall Street’s 0.1% forecast.

Consumer Credit

Total consumer credit rose $11.3 billion in May, up from a $6.5 billion gain in the prior month, the Federal Reserve said Monday. Economists had been expecting a $8 billion gain, according to a Wall Street Journal survey. The rise in May translates into a 2.7% annual rate, stronger than the 1.5% rise in the prior month.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates are seeing a decrease by -0.08% with the current rate at 6.17%
• 30-Yr FRM rates are seeing a decrease by -0.06% with the current rate at 6.89%

MND Rate Index

• 30-Yr FHA rates are seeing a decrease by -0.25% for this week. Current rates at 6.25%
• 30-Yr VA rates are seeing a decrease by -0.26% for this week. Current rates at 6.26%

Jobless Claims

Initial Claims were reported to be 222,000 compared to the expected claims of 236,000. The prior week landed at 239,000.

What’s Ahead

Proceeding reports after the inflation data releases are, as expected, having a very light release schedule. The only notable release are the retail sales reports which indicate how much consumers have leveraged their purchasing power in the last quarter.