Commentary:
The next jobs release is May 3. April 5 new jobs came in at 303,000. While this was a slightly elevated total, it was comparable to job growth over the past 12 months.
The next CPI release is May 15 April 10 CPI increased from 3.2% to 3.5%. Energy prices up and the March 2023 data point was very low and it fell out of the annual CPI calc as the new data for March 2024 came in. CPI for March 2024
The next Fed meeting is May 1.
As mentioned last week, mortgage rates were likely to rise above 7.00% and they did.
With the Fed's next meeting being 2 weeks out on May 1, the market is going to be searching for a lead as to what will happen next. Uncertainty usually causes rates to rise. I suspect the market has overreacted. The change in the CPI was not due to any change in fundamentals, but more due to how the annual CPI is calc'ed--dominoes, a new month replaces the oldest month.
Looking to the April 2024 CPI data release on May 15----there should be an improvement as the relatively high monthly data point of 0.4% for April 2023 will fall off.
For the week ending 4.18.24 Mortgage rates INCREASED 22bp to 7.10%.
For a $100,000 loan, the monthly payment INCREASED $15.00 and to $672/mo or $0.49/day.
Mortgage rates INCREASED 22bp while the 10-year Treasury rates INCREASED 8bp for the week ended 4/18/24. The net difference resulted in a 14bp increase in the spread to 256bp. With the historical spread being 168 there now exists a “safety cushion” of 78bp above the historical spread.
The historic spread between the 10-year Treasury and mortgage rates is 168pb (see the green line, right axis) and currently is 78bp above the historical norm.
