💸 Unemployment Pushing Powell

Issue 81 - Happy Tuesday.

It's a new newsletter day! I hope you all like this expanded format. That said, I will NOT be posting a full newsletter next week as I will be camping with the family on the Russian River.

So yes, you’ll see those pictures, but I’m going to take some time to enjoy nature, my family, and that damn trailer that doesn’t get used enough, lol.

Those of you with access to the Monday morning sneak peek for rates will still be getting your fix. Details on how to join that exclusive list are below today’s rates.

If you’re enjoying GTG Weekly, please share it with someone else you think would enjoy it, too, even if I’m not sending it out next week, haha.

Big news week that could play with markets.

🪖See you in the trenches

PERSONAL
4th of July Party

We had a great block party on the 4th. Hopefully, this is the first of many in the future. It was hot… I was BBQ’ing, so I did not get nearly the number of videos or pictures I wanted (on the list for next year) but it was a great time!

INTEREST RATES
Rates 📢 July 9th, 2024

Rate data as of morning of publication. Unless noted otherwise, all scenarios are assuming 30 Year-Fixed mortgage, Purchase or R/T Refinance. No origination points charged, 780 FICO score, and 20% down payment. Provided for consumer education only and does not serve as a binding offer to extend lending. Payment period, interest rate, APR, and other terms subject to income, asset, and credit profile qualification. Provided courtesy of GTG Financial, Inc. NMLS 1595076. Equal housing opportunity. www.nmlsconsumeraccess.org

• Rate Markets: Last week, there was a reactionary movement in the markets based on speculation (Japanese Yen fears). This caused a sizeable JUMP in rates we reported on Monday, 7/1. We’re now on the flip side of that coin as the markets not only cooled off but also took the unemployment report on Friday the 5th and ran with the news of a 4% unemployment figure.

• 👀 Watching: It's Big News week, with Fed Chair Powell speaking in front of the Senate Tuesday and the House Wednesday (Semi-Annual Testimony) and CPI/PPI inflation data dropping late this week. Buckle up. We could see more speculation and daily movement as a result.

• Bottom Line: The market gives and the market takes. Expectations are that the 4% unemployment rate will trigger the Fed to consider a rate cut sooner rather than later.

Share GTG Weekly with colleagues and earn access to exclusive Monday morning rate updates directly to your inbox. Stay ahead of the curve!

TECHNICALS
All Eyes On Powell

Heavy news week on the slate. Today, Jerome Powell is testifying in front of the Senate and tomorrow, the House. This is a planned semi-annual meeting, but we’re all waiting to see how he reacts to last week’s job reports and what impact this will have on rate-cut decisions.

The Consumer Price Index (CPI) will be released on Thursday, and the Producer Price Index (PPI) on Friday.

We’re all hoping for strong numbers to fuel a rally as we move deeper into Summer.

When will the rate cut(s) happen? The million-dollar question. I am sticking to my guns. I have been saying this for six straight months. September. I firmly believe that the available data has shown that a cut has been warranted, but political maneuvering has kept that cut from occurring.

I know what you’re saying… they are separate: the Fed and the White House. But let’s be honest, someone is pulling strings in the back rooms.

📉 Sahm-thing Happening in the Labor Sector

• June Job Growth: 206,000 new jobs, slightly above estimates. However, revisions cut 111,000 jobs from April and May.

• Unemployment Rate: Rose from 4% to 4.1%, triggering the Sahm Rule, which indicates a likely recession.

• Impact: Potential recession could lead to lower mortgage rates as the Fed may cut rates to stimulate the economy.

📊 Private Payrolls, Annual Wage Gains Slow

• June Private Payrolls: Increased by 150,000, below the 160,000 forecast. Slowing job growth over the last three months.

• Wage Growth: Slowing, with job changers seeing a 7.7% increase in June, down from 9.3% in April.

• Impact: Slower wage growth may ease inflation pressures, potentially leading to stable or lower interest rates.

🏢 Job Openings Remain Near 3-Year Low

• May Job Openings: 8.14 million, with a steady quit rate at 2.2%.

• Impact: Fewer job openings suggest a cooling labor market, which could lead to lower interest rates if the trend continues.

📈 Jobless Claims Trending Higher

• Initial Claims: 238,000, with Continuing Claims at 1.858 million.

• Impact: Rising claims indicate a potential economic slowdown, which could influence the Fed to cut rates, benefiting buyers.

🏡 Strong Spring for Home Prices

• Home Price Increases: CoreLogic reports a 0.6% rise in May, with a forecast of 0.7% in June.

• Impact: Rising home prices may push buyers to lock in current rates before further increases, but potential rate cuts could make mortgages more affordable.

🔍 Looking Ahead

• Upcoming Data: CPI (Thursday) and PPI (Friday) will provide insights into inflation. Fed Chair Powell's testimony could signal future rate moves.

• Impact: High inflation might push rates up, but signs of economic weakness could lead to rate cuts, impacting buyers’ and sellers’ decisions.

TIPS & TRICKS w/ Erik Browning
How 8.75% Can Be Better Than 7%

Writing Off Income vs Qualifying
Would you rather have the lowest rate or the best net bottom line? We're breaking down how to have your cake and eat it, too.

📉 Your CPA/Tax Preparer's Goal: Minimize your tax burden. For rental property owners, this often results in showing zero or negative income due to expenses or accelerated depreciation. While this is beneficial for taxes, it can pose challenges during loan qualification for agency loans (VA, FHA, USDA, Conventional).

📊 Impact on Loan Qualification: Agency loans are based on your reported income and personal ability to repay. Tax returns play a crucial role in this evaluation. Writing off too much income can make it appear as if you can't afford the house you desire, even if you have the actual income.

Read the full article here…

INDUSTRY
Other Good Stuff This Week

🪙 Will Debt Sink the American Empire - Great article by Professor Peter St.Onge breaking down the similarity of the Roman Empire and the United States and what’s going on with our debt load.

📈 24% of Mortgages Now Above 5% - If rates come down to the high 5’s or low 6’s, is that going to be enough to get more inventory on the board?