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Here’s what we’ve got for you today:

1. Market Mover This Week: CPI Print 📠

By the way, this article on ADP Report is the most clicked link in this newsletter, you should check it out if you are interested.

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Nuwave Rates Today 📉

This week, the market saw a massive market mover coming on the heels of the negative ADP report last week -

Market Mover This Week: CPI Print 📠

As the market opened Wednesday, we saw one of the largest single-day swings in quite a while. The MBS market moved positively by over 70bps (normal days see swings between 10-15bps).

CPI rose just .2% from last month. CPI rose 3% in June from a year earlier. The slowest gain in inflation in over two years.

The chart below details YOY Core and Headline CPI change. Look at the sharp decline we are seeing since June 2022. This is why the market is moving. We are rapidly approaching the Feds target which could mean that interest rate cuts could come as early as Q1 2024.

What does this mean?

Based on the market reaction, many investors believe we have reached the peak of interest rates and that the worst is behind us.

At this point, it is all but certain that the Fed will raise rates by 25bps in July.

But as we know, mortgage companies are forward-looking, they constantly try to get ahead of moves in the market. So many companies are actually lowering their interest rates in preparation for rate cuts in early 2024.

While the ADP jobs report made us believe that the economy remained strong and inflation was entrenched, this CPI report shattered those beliefs.

It may be too early to say, but Powell and the Fed may actually land this plane softly…despite Powell being a punching bag for the last 18 months.

How does it impact your clients?

For clients who are preapproved and looking - this is their window to get under contract. We have seen a brief reprieve in interest rates for buyers as they fall under 7%.

With an inevitable rate hike coming in two weeks, this weekend and next week will be an incredible opportunity to lock in a rate at favorable pricing.

If you have clients who went under contract and locked last week, consider having their deal reviewed at the new interest rates. Nuwave Lending offers a free Second-Look for any MF Lending readers.

Thanks for reading - that is all we have for today 😎

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— Michael F DiLucchio