Inflation? Strong Home Equity, Jobs Update

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The Case for Inflation? Treasury Secretary Janet Yellen continues to say that she’s not worried about inflation and that they can still hike rates if it comes. Some economists believe that the Fed should be more proactive and that inflation figures aren’t transitory after all.

Rates – experienced minimal fluctuation this week and ended the week slightly better than where they started. There was a bond coupon rollover on Thursday of -19 basis points. Rates are down approximately 1/4% from this time last year.

Home Equity – Core Logic released their Homeowner Equity Report which showed a whopping 20% year over year gain at the end of first quarter. Homes with negative equity fell 24% year over year to only 1.4M or 2.6% of all mortgage properties (approximately 2/3 of properties are mortgaged). During the peak of the housing bubble 26% of mortgaged homes were underwater.

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Jobs – the number of people filing for unemployment for the first time decreased marginally but there is still approximately 15.3M people receiving some sort of unemployment benefits (up from 2M pre-pandemic).

Inflation – the Consumer Price Index (CPI) headlined figure increased 0.8% year over year to 5% (highest increase in 13 years) and the core rate, which strips out food & and energy, also increase 0.8% to 3.8%, the highest year over year increase in 29 years. The year over year numbers are exaggerated as this time last year the economy was at a standstill.

Mortgage Application volume decreased by 3% from the previous month. Purchase applications are down 24% year over year (lack of supply) and refinances are down 27%.

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