The Rise of American Natural Gas – in the early 1990s natural gas was a small player in the US power market and the US only imported. Around 2006-8 there was a revolution in shale drilling. The combination of Hydraulic fracking technology and stronger storms (like Katrina that caused gas prices to spike) created an atmosphere where the exporting of natural could become commercially viable. By 2015 a cruise ship sized vessel storing 72,000 tons of Liquified Natural Gas (enough to heat 45,000 homes in the US for one year or 17M homes in the UK during the winter for one day) disembarked from Louisiana terminal on the way to Brazil. Since then our exports of LNG have continued to grow and as of last year we are now the largest exporter of LNG in the world. Currently about 1/3 of the US’s primary energy consumption is made up by LNG.
Mortgage Rates increased this week as the price of Mortgaged Backed Securities (MBS) responded negatively to a strong ADP jobs report and reports of Fed plans to continue with short term rate hikes. Mortgage Rates are up approximately 1.25% from this time last year.
Jobs- the BLS jobs report (not pictured) showed 209,00 jobs created in June which was weaker than predicted and weaker than the ADP report (pictured) that was also released this week. The headline unemployment figure declined from 3.7% to 3.6% but the all-in U-6 unemployment rate increased from 6.7% to 6.9%. This figure includes part time workers and people who have not actively sought a job in over 4 weeks which shows that much of the job gains came from part time workers. The ADP report showed strong job creations in the service sector (379,000) and construction (97,000)
The Job Openings and Labor Turnover Survey (JOLT) reported job openings declined from 10.3 to 9.8M. Leisure and Hospitality shed 108,00 job openings which contributed to the weakness in the BLS jobs report.
Mortgage Applications to purchase homes declined 4% last week after the consecutive weeks of increase. Purchase applications are down 22% year over year. Refinances declined 4% last week and are down 30% year over year.