NATIONAL MARKET UPDATE
 Residential construction spending headed up 0.9% in April, and is now 18.4% ahead of a year ago. Spending on new single-family home building gained 0.5%, while new multifamily spending increased 0.8%.The national Case-Shiller Home Price Index saw record increases of 2.6% in March, and 20.6% annually. The FHFA index of prices for homes financed with conforming mortgages was up 1.5% in March and 19.0% for the year.But the Mortgage Bankers Association’s forecasts: “prospective homebuyers should start to see moderation from the double-digit price appreciation reported for well over a year in most of the country.”

 

 REVIEW OF LAST WEEK
 GOOD JOBS BAD FOR STOCKS… A better-than-expected May jobs report slammed stocks, reinforcing investor fears the Fed would keep its foot on the gas with interest rate hikes that could spark a recession.Jobs data saw wages up 5.2% annually, but they lag consumer price inflation of more than 8% by a substantial margin. Services sector activity slowed for the second straight month, to the lowest read since February 2021.Yet business activity in the manufacturing sector expanded more than forecast, consumer confidence came in better than expected, and both initial and continuing jobless claims kept falling.

The week ended with the Dow down 0.9%, to 32,900; the S&P 500 down 1.2%, to 4,109; and the Nasdaq down 1.0%, to 12,013.

The May jobs report sent bond prices down, the 30-year UMBS 4.5% off 0.92, to $101.12. In Freddie Mac’s Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate inched down, marking three straight weeks of declines. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW… Realtor.com reports, “Nearly 3 in 4 home sellers this year are also planning to buy a home, so what’s good for the buyer is also, in many cases good for the home seller.”

 

 THIS WEEK’S FORECAST
 INFLATION, JOBLESS CLAIMS GAIN, CONSUMERS UNHAPPY… The Consumer Price Index (CPI) should show inflation continuing to rise. Initial Unemployment Claims are also expected up. Small wonder the University of Michigan Consumer Sentiment index is forecast to remain historically low. 

 

 FEDERAL RESERVE WATCH
 Forecasting Federal Reserve policy changes in coming months. The futures market now expects half percent rate hikes at each of the Fed’s next three meetings. Note: In the lower chart a 100.0% probability of change is a 100.0% probability the rate will rise.

AFTER FOMC MEETING ON: CONSENSUS
Jun 15 1.25%-1.50%
Jul 27 1.75%-2.00%
Sep 21 2.25%-2.50%

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Jun 15 100.0%
Jul 27 100.0%
Sep 21   70.8%

 

 BUSINESS TIP OF THE WEEK
If you’re not getting where you want to go, give yourself bigger goals. Then ask yourself some bigger questions. What will you have to learn—to say “no” to—and to alter in your daily routine? Who will you have to become? The answers will get you to the next level.
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