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Market Forecast: Job Openings, Consumer Credit, Mortgage Applications

  • May 06, 2019

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Last week, the Federal Open Market Committee voted to leave the federal benchmark interest rate unchanged.  Mortgage rates reacted accordingly but did not move significantly.  This week, the only housing-related report will be the Mortgage Bankers Association (MBA) weekly mortgage application survey.  Other market-moving reports include the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) and consumer credit. 

The JOLTS report is used to review month-to-month changes in job openings, offer rates, and voluntary quits.  The data lags by one month but is still used to gauge employment trends.  In February, the survey showed 7.087 million job openings, down from January’s figure, suggesting the labor market has tightened. 

Consumer credit tracks month-to-month changes in total outstanding consumer debt segmented by revolving and nonrevolving credit.  Revolving credit includes regular debt like credit card debt and nonrevolving credit counts longer-term debt like car loans and student loans, but not mortgage debt.  Healthy consumer borrowing is a sign of economic strength. Too much borrowing may be a sign of trouble ahead because consumers are unable to pay their bills without credit.  In February, total outstanding credit increased to a seasonally adjusted $4 trillion.  Revolving credit accelerated at a pace of 3.4% month-over-month and nonrevolving credit is up 3.9% month-over-month. 

The MBA weekly mortgage application survey tracks week-to-week changes in new purchase and refinance mortgage applications.  For the week ending 5/3, new purchase applications declined 4.0% and refinance applications declined 5.0%, for a composite decrease of 4.3%. 

One word that stood out in Federal Reserve Chair Jerome Powell’s press conference last week, was the use of the word “transitory.”  Powell suggests that the FOMC has seen economic weakness as the result of “transitory” factors like portfolio management services and lower prices on apparel and airfare and stated, “we’re going to be watching these things carefully to see if that’s the case.” 

 

Sources: Bloomberg, CNBC, CNBC, Econoday, MarketWatch, MarketWatch, Mortgage News Daily

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