Market Update -Rates, CPI & PPI inflation, job cuts, and layoffs

Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Kicking things off, interest rates almost unchanged week over week, going from 6.79% to 6.78%. Again, this is week over week. We did see some volatility in the middle of the week, but not a huge amount. So overall, still in pretty good shape there. As far as weekly mortgage tip 1, I wanted to talk about how a closing date impacts closing costs on a loan. So you may or may not know, but the day that you close on your mortgage will impact the closing costs because they collect prepaid interest expenses from the date of closing through the end of that calendar month. That's what allows them to be able to skip all of the next calendar month before their first payment's due. So for example, if you closed on a deal on June 1st, You would collect interest from June 1st through the end of the month at closing, making your closing costs pretty significantly higher. Depending on the loan amount that you're looking at, that can be anywhere from $1,000 to up to $2,000 or $3,000 more by closing on the 1st rather than closing on the 30th. And the first payment, that's just going to be based on what calendar month you close in. So if you close in June, whether it's the 1st or the 30th, you're going to skip all of July and the first payment won't be due until August 1st. 1st. So if you're looking for the absolute lowest closing costs, and you don't mind having the first payment be only about 30 days away, you ideally want to close near the end of the month. But if you're closing at the beginning of the month, look for higher closing costs, but a longer timeframe before the first mortgage payment is due. Next up, as far as reports go for the week, the February CPI, the Consumer Price Index inflation report came out showing headline inflation only up 0.2%, which is below the 0.3% that was expected. Year over year, inflation dropped from 3% to 2.8%, and core rate, which strips out food and energy prices, also rose the same 0.2% below estimates of 0.3%. Core year over year dropped from 3.3% to 3.1%. So nice to see that continually coming down as well. Next, the Challenger job cuts report for the January, February, first 2 months of the year reported layoffs of 222,000, which is the highest 2-month period recorded since 2009. Of those, 63,000 were from DOJ cuts. So that's going to be leading it to be quite a bit higher than it would have been. But even without those, it's still higher than the normal that we've seen. This may be a sign of labor market weakness with unemployment potentially moving higher, which would end up being a good thing for mortgage rates, but will be too soon to tell right now with all the changes if that's going to be continually a lasting number. Next, the January JOLTS, which is the job openings reports for the month, came in up at 7.75 million job openings, slightly above estimates of 7.6. But December's reading was also revised lower from 8.1 million to 7.65, negating a lot of the slight little bit of strength that we saw in the headline number. And lastly here, PPI, which is the Producer Price Index for wholesale inflation for the month of February, came out showing inflation flat for the month, no rise, no decline, which is well below the 0.3% that was expected. Year over year, we're seeing it up 3.2%, which is down from 3.7% in the previous month, even though we got a pretty big bump, a 1.2% drop in energy prices for the month alone, which did help this pretty significantly. The core rate showed a 0.1% drop in inflation, which again was quite a bit below the 0.3% growth that was expected. So 0.4% change from expectations for the month. The core rate dropped from 3.8% to 3.4% year over year. Now ordinarily, an inflation report coming in significantly lower than expectations like this would be great for the bond markets and in turn market prices or interest rates. But on the— with that, we actually saw bonds going the opposite direction on this. Because of some of the internal components within that PPI report. Those particular components that do get factored into PCE inflation, which is what the Federal Reserve looks at for their guidelines, for their kind of benchmark on where they want to see inflation, those particular components were showing higher in the PPI report, thinking that when the PCE report comes in, it may end up showing a higher than expected amount of inflation, which would be bad for for mortgage rates. So games within games when traders and the markets are looking at these reports, trying to guess where things are going to be going. But as always, remember that it's not the data itself that moves the markets, it's whether or not the data is in line with expectations and how that may change future forecasts. So as always, hopefully this is helpful. Let me know if you need any additional information, always happy to help. We have a great weekend. We'll see you next time. Take care.