For the week of JULY 5, 2022

“Much effort, much prosperity.”—Euripides, ancient Greek dramatist

After heading south six months straight, Pending Home Sales logged a 0.7% gain in May. This measure of contract signings is still down 13.6% year-over-year, blamed mostly on higher mortgage rates.

Stubbornly growing home prices finally slowed, as the Case-Shiller National Home Price Index booked a smaller gain in April than it did in March, reversing four straight months of increased gains.

Realtor.com reports housing inventory improved again in June, up 18.7% over last year, the largest increase in the data's history, driven by the combination of more sellers listing and moderating buyer demand.

DOWN AGAIN... Stocks booked the worst first half of a year for the S&P 500 since 1970 in another losing week driven by concerns about the economy, inflation, corporate earnings, and rate hikes.

We had weaker-than-expected Consumer Confidence, another hike in PCE inflation (the Fed's favorite measure), a slower growing ISM Manufacturing Index, and Q1 GDP showing the economy contracting at a 1.6% annual rate.

Hope could be found in increased Personal Consumption, though inflation has consumers spending more and getting less. Good signs: initial jobless claims fell to 231,000, while continuing claims dropped to 1.328 million.

The week ended with the Dow down 1.3%, to 31,097; the S&P 500 down 2.2%, to 3,825; and the Nasdaq down 4.1%, to 11,128.

Bonds gained strongly, the 30-year UMBS 4.5% UP 0.96, to $100.25. The national average 30-year fixed mortgage rate retreated in Freddie Mac's Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW… While rates have climbed, it should be noted that mortgage rates are still near historical lows and well under historical averages.

SERVICES SLOW, JOBS GAIN, FED MINUTES RELEASED... The services sector should show slower expansion by the June ISM Non-Manufacturing Index. The June jobs report is expected to deliver a modest gain in Nonfarm Payrolls, with Hourly Earnings still trailing inflation by a lot. FOMC Minutes from the Fed's June confab may give us useful insights on rates and the economy.

U.S. financial markets were closed yesterday, July 4, in observance of Independence Day.

Forecasting Federal Reserve policy changes in coming months. No one thinks the Fed will stop raising rates for the next three meetings. Opinions differ only on how much they’ll hike at each session.  Note: In the lower chart an 82.6% probability of change is an 82.6% probability the rate will rise.

Probability of change from current policy:

In a changing economic environment, it’s easy to worry about the future. Instead, focus on the present—acquiring more business. People who key on getting more clients, get more clients, no matter what’s happening in the economy.