Rate and numbers in America

  • Last week, the 30-year fixed rate increased 11 basis points to 3.22% per the most recent Primary Mortgage Market Survey from Freddie Mac. This marks the highest level since May 2020, and more than half a percent higher than January 2021. With higher inflation, promising economic growth and a tight labor market, Freddie Mac expects rates will continue to rise. The impact of higher rates on purchase demand remains modest so far given the current first-time homebuyer growth.
  • The Consumer Price Index for All Urban Consumers increased 0.8% in November on a seasonally adjusted basis after rising 0.9% in October, according to the U.S Bureau of Labor Statistics. Year-over-year, the index for all items like food and energy rose 4.9% over the last 12 months. These changes are the largest seen in at least 13 years. In mid-December, the Federal Reserve made their strongest move to tackle inflation, moving up the timeline for what could potentially be as many as three interest rate hikes in 2022. The Fed’s policy pivot toward inflation, and away from boosting the job market, marked a significant shift in how the Fed plans to respond to rising costs during the pandemic, according to an article from the Washington Post.
  • More news on the price front, the Federal Reserve Bank of New York launched a new metric the Global Supply Chain Pressure Index, which measures disruptions to supply chains. The gauge combines 27 indicators, including cross-border transportation costs and manufacturing data. The GSCPI recently indicated that the pressures on supply chains are at the highest level since at least 1997, but are exhibiting signs of peaking and might start to moderate somewhat going forward. Everyone from consumers, to builders, to the White House would welcome an ease in the aforementioned supply chain problems, as rising costs have been felt nationwide for months.
  • The number of Americans filing for unemployment insurance edged higher as jobless claims totaled 207,000 last week, per the Labor Department. The latest claims data follows an encouraging labor market report from ADP. Hopefully this is consistent with the forthcoming Nonfarm Payroll figures for December, which will be a solid indicator of just how hard omicron has affected hiring. Economists expect the report to show 400,000 nonfarm payrolls added throughout last month and for the unemployment rate to drop slightly to 4.1%. Such gains would show notable improvement from November’s slow growth.