July CPI Rise, Retail Sales Surge, and Refinance Applications Soar as Rates Drop: Portafolio Capital Markets Recap for Week Ending 8/16/2024
July CPI Shows Modest Rise, Driven by Shelter Costs
As expected, inflation ticked up in July, driven mainly by a rise in housing expenses, according to a Labor Department report released Wednesday. The Consumer Price Index (CPI) rose by 0.2% for the month, bringing the year-over-year inflation rate to 2.9%. The core CPI, which excludes volatile food and energy prices, also climbed 0.2% for the month, in line with forecasts, resulting in a 3.2% annual increase. Both headline and core inflation rates are at their lowest levels since early 2021. A 0.4% increase in shelter costs was responsible for the bulk of the CPI's rise. Although overall food inflation was modest, some categories, such as eggs, saw a notable 5.5% increase. The report suggests that a potential interest rate cut by the Federal Reserve in September remains a possibility, with market expectations leaning towards a small reduction at the next Fed meeting.
The full press release by the Bureau of Labor Statistics can be found here.
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July Retail Sales Surge by 1%, Marking Strong Annual Growth
The U.S. Census Bureau reported on August 15, 2024, that retail and food services sales for July 2024 reached $709.7 billion, reflecting a 1.0% increase from the previous month and a 2.7% rise from July 2023. Over the three-month period from May to July 2024, sales increased by 2.4% compared to the same period last year. Retail trade sales rose by 1.1% from June 2024 and were up 2.6% year-over-year. Notably, nonstore retailers experienced a 6.7% increase from July 2023, while food services and drinking places saw a 3.4% rise. The report also revised the May to June 2024 sales change to a slight decline of 0.2%.
The full press release by the US Census Bureau can be found here.
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Mortgage Applications Surge Nearly 17% as Refinancing Soars 35% Amid Lower Rates
Mortgage applications saw a significant increase of 16.8% for the week ending August 9, 2024, driven primarily by a 35% surge in refinancing activity, according to the Mortgage Bankers Association (MBA). This marks the highest level of application activity since January 2023, with the Refinance Index now 118% higher than the same week last year. While purchase applications rose modestly by 3%, they remain 8% lower compared to a year ago. The decline in interest rates for both 30- and 15-year fixed-rate mortgages over the past two weeks has spurred borrowers to take advantage of refinancing opportunities, with the refinance share of mortgage activity increasing to 48.6%. Meanwhile, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances slightly decreased to 6.54%, while jumbo loan rates inched up to 6.78%.
The full press release by the Mortgage Bankers Association (MBA) can be found here.
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