Vital Statistics:
Stocks are higher this morning as we begin Fed Week. Bonds and MBS are down.
Despite the hostilities between Israel and Iran, we are not seeing any flight-to-safety bid in the bond market.
The week ahead will be dominated by the FOMC meeting on Tuesday and Wednesday. We won’t have much in the way of market-moving data, but we will get some housing data with housing starts and the NAHB Housing Market Index. Retail Sales and Leading Indicators are also on the menu. Markets will be closed on Thursday for the Juneteenth holiday.
We also have the G7 meeting this week to discuss trade.
Consumer sentiment improved in in early June, according to the University of Michigan Consumer Sentiment Survey. The index improved 16% compared to May, but is still down about 20% from December 2024. The shock of the Liberation Day tariffs is wearing off. Notably, inflation expectations improved dramatically: Year-ahead inflation expectations fell from 6.6% to 5.1%. Longer-run inflationary expectations moderated as well.
Median down payments fell for the first time in two years, according to research from Redfin. The typical down payment fell 1% to $62,468. In percentage terms, the down payment rose 1% to 15.1%.
“The buyers who are moving forward today are being very careful with their finances because with housing costs near record highs, they’re typically spending a big portion of their paycheck to buy a home. I’m seeing an uptick in first-time buyers looking for starter homes,” said Fernanda Kriese, a Redfin Premier agent in Las Vegas. “Combine that with concerns about layoffs and a potential recession, and people are doing things like cross-comparing mortgage origination fees, shopping around for lenders, and looking into down-payment assistance.”
Housing inventory is increasing, and the market is becoming more in favor of buyers than sellers. New listings rose 5.2% YOY and active inventory is up 27.7% year-over-year. Days on market has increased by 6 days, while home prices are essentially flat.
