Quiet Week

During an extremely light week for economic data, mortgage markets were relatively quiet. Comments from Fed officials and news about tariffs caused little reaction. Mortgage rates ended the week slightly higher. 

While the headline figure for jobless claims was consistent with a solid labor market experiencing relatively few layoffs, another major component of the report was a bit more troubling. The reading for continuing jobless claims, which measures the total number of people collecting unemployment insurance each week, rose to the highest level since November 2021. This suggests that it is difficult for people who are out of work to find jobs. In other words, it appears that companies continue to be reluctant to lay off their current employees, but they are slowing their pace of hiring new workers. 

The detailed minutes from the June 18 Fed meeting revealed diverging opinions among officials about the outlook for future monetary policy. They generally were in agreement that it likely would be appropriate to reduce the federal funds rate later in the year, but the anticipated timing and magnitude of the cuts varied widely. Officials were split about balancing potential increases in inflation due to tariffs and signs of weakness in the labor market. Most investors currently expect that the next Fed rate cut will take place in September. 

Investors will continue to look for additional information about tariff policies and monitor comments from Fed officials. For economic reports, the Consumer Price Index (CPI), a widely followed monthly inflation indicator that looks at the price changes for a broad range of goods and services, will come out on Tuesday. The Producer Price Index (PPI), another monthly inflation indicator, will be released on Wednesday. Retail Sales and Import Prices will be released on Thursday. Since consumer spending accounts for over two-thirds of U.S. economic activity, the retail sales data is a key measure of the health of the economy. Housing Starts will come out on Friday.