Vital Statistics:
Stocks are higher this morning as earnings season kicks off and inflation data remains tame. Bonds and MBS are up.
Inflation at the consumer level continued to show limited evidence of tariff-driven inflation. The headline CPI rose rose 0.3% MOM and 2.7% YOY, which was in line with Street expectations. Shelter inflation of 0.2% accounted for most of the increase. If you strip out food and energy, CPI inflation rose 0.2% MOM and 2.9% YOY, which was in line with Street expectations.
A third of US housing markets are seeing price declines according to ICE. Annual price growth in June was just 1.3%, a substantial decline from the mid single digit price growth we have seen over the past several years. Inventory is building, however affordability constraints are still keeping buyers sidelined.
“There are two competing forces in the housing market right now,” said Andy Walden, head of mortgage and housing market research at ICE. “Increasing inventory levels are helping to make homes more affordable, but prices are falling in an increasing number of markets and homes are taking longer to sell, which could make homeowners reluctant to list.”
JP Morgan reported better than expected numbers this morning, although a large accounting item is skewing year-over-year comparisons. CEO Jamie Dimon said: “The U.S. economy remained resilient in the quarter. The
finalization of tax reform and potential deregulation are positive for the
economic outlook, however, significant risks persist – including from
tariffs and trade uncertainty, worsening geopolitical conditions, high
fiscal deficits and elevated asset prices. As always, we hope for the best
but prepare the Firm for a wide range of scenarios.”
Mortgage origination volume increased substantially, rising 26% YOY to $13.5 billion. Despite the jump in volume, production income actually fell, from $157 million to $151 million. This was offset by an increase in servicing income. Provisions for credit losses fell, indicating that the consumer remains resilient.
