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Progressive Loan Funding
 
Provided to you Exclusively
By
Ron Marks
 
Ron Marks
NMLS #246213
Progressive Loan Funding
Office: 562-592-7500
Cell: 714-325-1355
E-Mail: rmarks@progressiveloan.com
 
Ron Marks <br> NMLS #246213
 
For the week of Jul 04, 2022 --- Vol. 20, Issue 26

A Look Into the Markets
 




















The Fourth of July, Independence Day or July 4th was first recognized as a federal holiday in June of 1870, but the tradition of the 4th celebrations dates back to the 18th century and the American Revolution. On July 2nd, 1776, the Continental Congress voted in favor of independence, and two days later on the 4th of July, delegates from the 13 colonies adopted the Declaration of Independence, a historic document drafted by Thomas Jefferson. From 1776 to the present day, July 4th has been celebrated as the birth of American independence, with festivities ranging from fireworks, parades, and concerts to the good old-fashioned backyard barbecues.

"On beautiful, for spacious skies. For amber waves of grain" - America the Beautiful by Ray Charles.

This past week, some weak economic signals sparked increasing fears of a recession. Let's walk through what happened and look ahead to next week.

"While the Present Situation Index was relatively unchanged, the Expectations Index continued its recent downward trajectory - falling to its lowest point in nearly a decade. Consumers' grimmer outlook was driven by increasing concerns about inflation, in particular rising gas and food prices. Expectations have now fallen well below a reading of 80, suggesting weaker growth in the second half of 2022 as well as growing risk of recession by year end." The Conference Board's Consumer Confidence Report.

This reading is important because if pessimism begins to negatively affect consumer spending, the chance of a recession will rise sharply as consumer spending makes up two-thirds of our economic growth.

On Tuesday, the third and final reading of 1st Quarter GDP showed the economy shrank by 1.6%, worse than expectations of -1.5%. A recession is defined by two quarters of negative growth. The 2nd quarter is forecasted to barely grow, which means we will be in or close to a recession in the 1st half of 2022.

The silver lining about all this recession talk? It will put a limit to how high rates go. We are two weeks past the 3.49% peak in rates which ironically happened when the Fed raised the Fed Funds rate by .75%.

Bottom line: Long-term rates have stabilized but we should not expect much more improvement until inflation moderates further. With that said, if you are interested in purchasing a home, it remains a great time with rates beneath the rate of inflation.

Looking Ahead

Next week we will receive important employment readings by way of the ADP Report and Jobs Report. The Fed wants to slow down the labor market and we have already seen layoff announcements in corporate America, so we will see if that is reflected in this week's figures.


Mortgage Market Guide Candlestick Chart
 

Mortgage-backed security (MBS) prices are what determine home loan rates. The chart below is a one-year view of the Fannie Mae 30-year 4.5% coupon, where currently closed loans are being packaged. As prices go higher, rates move lower and vice versa.

You can see the right side of the chart; prices fell to new 2022 price lows, meaning 2022 rate highs but bounced sharply higher after the big Fed rate hike two weeks ago. Time will tell whether we just witnessed the MBS price bottom and mortgage rate peak for 2022.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Jul 01, 2022)
Japanese Candlestick Chart
 

Economic Calendar for the Week of July 04 - July 08

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Wed. July 06
10:00
ISM Services Index
Jun
55.7
 
55.9
Moderate
Thu. July 07
08:15
ADP National Employment Report
Jun
200K
 
128K
HIGH
Thu. July 07
08:30
Jobless Claims (Initial)
7/1
239K
 
233K
Moderate
Fri. July 08
08:30
Non-farm Payrolls
Jun
295K
 
390K
HIGH
Fri. July 08
08:30
Unemployment Rate
Jun
3.6%
 
3.6%
HIGH
Fri. July 08
08:30
Hourly Earnings
Jun
0.3%
 
0.3%
HIGH
Fri. July 08
08:30
Average Work Week
Jun
34.6
 
34.6
HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: rmarks@progressiveloan.com

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Ron Marks
3010 Old Ranch Pkwy. #440
Seal Beach CA 90740

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