By Ryan Casey Stephens, FPQP®
Special Contributor
Just like that, the first week of August is here. As vacations wind down and thoughts of back-to-school creep into our minds, let’s look at the three things you need to know this week.
Jackpot!
People tend to spend record amounts of money in lotteries during difficult financial seasons, as mentioned in my Op-Ed last week. This year is no exception, and over the weekend someone in Illinois bought the only winning ticket of the $1.3 billion Mega Millions lottery. The odds of being the only winner of the second-largest prize in the lottery’s history were greater than one in 300 million.
Their Eyes Were Watching Jobs
This Friday will bring the latest Bureau of Labor Statistics jobs report, a tool that provides valuable, real-time data on the workforce in the U.S. and earnings. We’ve enjoyed low unemployment in past reports, but an increase in joblessness on this report (or any in the near future) might be yet another signal the economy is slowing.
Last Friday was no surprise
The Fed’s rate hike of .75 percent last week came ahead of their favorite inflation report – the Personal Consumption Expenditure (PCE). That report ignores food and energy inflation, so the numbers are usually more favorable than the CPI inflation report (which might be why the Fed likes it).
The fact that the Fed raised the rate aggressively before the report was released should be seen as a sign they knew what was coming: namely, that year-over-year inflation was expected at 6.7 percent but measured at 6.8 percent. Remember that inflation, not the Fed rate, is the enemy of mortgage bonds. If the Fed can manage to lower inflation by raising their rate, it should cause mortgage rates to ease in the future.
Ryan Casey Stephens FPQP® is a mortgage banker with Watermark Capital. You can reach him at [email protected].
