Morning Report: Mixed signals from the Fed

Vital Statistics: Stocks are higher this morning on no real news. Bonds and MBS are up. The Fed’s decision to hold rates steady yet forecast two more rate hikes appears inconsistent, at least to ex-Treasury Secretary Larry Summers. “This meeting felt like it was driven as much by the internal political dynamics of the Fed, as by any consistent and coherent reading of the economic situation and that was a bit disturbing to me…I found the Fed’s action a little bit confusing. I understand the arguments for not hiking this at this meeting. But those arguments wouldn’t point towards signaling two further rate increases, they wouldn’t point towards significantly revising the forecasts towards a stronger economy and more inflation…I understand the arguments for having gone the other way,” Summers continued. “But I don’t really understand the internal consistency of an approach of pausing at this meeting, but then signaling two further rate hikes down the road and signaling that they no longer expect unemployment to increase nearly as much as they used to expect it.” I am not sure what “internal political dynamics” refers to in this context given that the vote was unanimous. The minutes from the meeting will make interesting reading when they come out in a few weeks. Consumer sentiment improved in June, according to the University of Michigan Consumer Sentiment Survey. Sentiment is improving, however it is still low on a historical basis; Inflationary expectations for the next year improved dramatically, falling from 4.2% in May to 3.3% in June. Longer-term expectations remain persistently in a 2.9%-3.1% range. Mortgage credit decreased in May, according to the MBA’s Mortgage Credit Availability Index. “Mortgage credit availability decreased for the third consecutive month, as the industry continued to see more consolidation and reduced capacity as a result of the tougher market. With this decline in availability, the MCAI is now at its lowest level since January 2013,” said Joel Kan, Vice President and Deputy Chief Economist. “The Conforming index decreased almost 4 percent to its lowest level in the history of the survey, which dates back to 2011. The Jumbo index fell by 1.5 percent last month, its first contraction in three months, as some depositories assess the impact of recent deposit outflows and reduce their appetite for jumbo loans…Additionally, lenders pulled back on loan offerings for higher LTV and lower credit score loans, even as loan applications continued to run well behind last year’s pace. Both Conventional and Government indices saw declines last month, and the Government index fell by 3.8 percent to the lowest level since January 2013. In a market where a significant share of demand is expected to come from first-time homebuyers, the depressed supply of government credit is particularly significant.” [Image] Here are Some More Investing Tips and Resources. Enjoy! Sponsored [You Can’t Escape Inflation So Profit From It Here]( “Inflation is bad” – yeah we all get it. There’s nothing you can do to stop it though. If you can’t beat ‘em – join ‘em. 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But those arguments wouldn’t point towards signaling two further rate increases, they wouldn’t point towards significantly revising the forecasts towards a stronger economy and more inflation…I understand the arguments for having gone the other way,” Summers continued. “But I don’t really understand the internal consistency of an approach of pausing at this meeting, but then signaling two further rate hikes down the road and signaling that they no longer expect unemployment to increase nearly as much as they used to expect it.” I am not sure what “internal political dynamics” refers to in this context given that the vote was unanimous. The minutes from the meeting will make interesting reading when they come out in a few weeks. Consumer sentiment improved in June, according to the University of Michigan Consumer Sentiment Survey. Sentiment is improving, however it is still low on a historical basis; Inflationary expectations for the next year improved dramatically, falling from 4.2% in May to 3.3% in June. Longer-term expectations remain persistently in a 2.9%-3.1% range. Mortgage credit decreased in May, according to the MBA’s Mortgage Credit Availability Index. “Mortgage credit availability decreased for the third consecutive month, as the industry continued to see more consolidation and reduced capacity as a result of the tougher market. With this decline in availability, the MCAI is now at its lowest level since January 2013,” said Joel Kan, Vice President and Deputy Chief Economist. “The Conforming index decreased almost 4 percent to its lowest level in the history of the survey, which dates back to 2011. The Jumbo index fell by 1.5 percent last month, its first contraction in three months, as some depositories assess the impact of recent deposit outflows and reduce their appetite for jumbo loans…Additionally, lenders pulled back on loan offerings for higher LTV and lower credit score loans, even as loan applications continued to run well behind last year’s pace. Both Conventional and Government indices saw declines last month, and the Government index fell by 3.8 percent to the lowest level since January 2013. In a market where a significant share of demand is expected to come from first-time homebuyers, the depressed supply of government credit is particularly significant.” [Continue Reading...](?site= [Morning Report: Mixed signals from the Fed]( And, in case you missed it: - [Pound to Dollar Rate Strengthens Reaching 2023 High](?site= - [Unlock the Secrets of Swing Trading Success: Your Exclusive Webinar Invitation – July 1, 2023](?site= - [How To Use Delta When Trading Options](?site= - [O Dividend Increase](?site= - [Hong Kong Stocks in Yuan Drive Global Currency Shift](?site= - FREE OR LOW COST INVESTING RESOURCES - [i]( [i]( [i]( [i]( Sponsored [Discover a Recession-Proof Company for Your Portfolio]( We have identified a recession-proof company that has tremendous potential for growth in the coming years. 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