Morning Report: The quits rate might be signaling future wage growth.

Vital Statistics:

 LastChange
S&P futures4,2339.8
Oil (WTI)70.340.33
10 year government bond yield 1.49%
30 year fixed rate mortgage 3.14%

Stocks are flattish this morning as oil rises above $70 per barrel. Bonds and MBS are up again.

The 10 year bond yield has started falling again, and this seems to be a global trade. The German Bund is back to negative 25 basis points, and just about every other sovereign bond yield is dropping. Some of this is a reversal of early-taper bets. Mortgage rates have been lagging the move as usual. Note the World Bank is forecasting that global growth will hit 5.6% this year, which would be the fastest growth since 1940. This would be incongruous with current bond yields, but with global central banks intervening so much in the market it might be useless as an economic signal.

Mortgage Applications fell 3.1% last week as purchases increased 0.3% and refis fell 13%. “Most of the decline in mortgage rates came late last week, with the 30-year fixed-rate mortgage declining to 3.15 percent. This likely impacted refinance applications,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “With fewer homeowners able to take advantage of lower rates, the refinance share dipped to the lowest level since April. Purchase applications were up slightly last week, and the large annual decline was the result of Memorial Day 2021 being compared to a non-holiday week, as well as the big upswing in applications seen last May once pandemic-induced lockdowns started to lift.”

Job openings hit a record high of 9.3 million at the end of April, according to the JOLTS job openings report. The biggest increase in openings came in food services. The quits rate hit 2.7%, and 4 million employees, both series records. Increases in the quits rate generally precedes increases in wages, and if the relationship holds, we should expect to see wage inflation into the second half of the year.

The increase in wages will undoubtedly contribute to further home price appreciation. I would expect to see this filter down into more esoteric mortgage products, as home price appreciation makes taking credit risk more appealing.

19 Responses

  1. I love this line,

    “This uncertainty over how they got their private key is scaring many bad players to exit Bitcoin holdings. “

    This would obviously not bother any honest person, right?

    https://www.marketwatch.com/story/how-did-federal-agents-recover-bitcoin-and-access-a-crypto-wallet-tied-to-the-colonial-pipeline-cyberattack-11623182259

    Like

    • Would that include rational people who fear another FDR-style asset confiscation?

      Like

      • I love the obtuseness of the dude. Why can’t I search your finances if you’ve got nothing to hide?

        Looks like an opportunity for the first cryptocurrency that can evade the government.

        Like

      • Probably. At the same time, rational people should not let themselves believe that there can be a completely anonymous, untraceable cryptocurrency that can resist penetration by state security agencies and the threat of government action against clearing houses, banks, etc.

        Like

        • There is a tremendous need for some asset that is beyond the reach of governments, that is for sure

          Like

  2. I scanned through most of the comments and did not see a denial of this assertion, just bitching about FOX News and previous Republican VP’s and VP nominees.

    https://www.dailykos.com/stories/2021/6/8/2034293/-Fox-host-This-is-what-happens-when-you-choose-your-vice-president-based-on-gender-and-skin-color

    The lefty interest in the ‘Cuda is fascinating to me.

    Liked by 1 person

  3. It’s impossible to describe how awesome this is!

    We honestly live in the most entertaining time in all of human history.

    Liked by 1 person

  4. This would be incongruous with current bond yields, but with global central banks intervening so much in the market it might be useless as an economic signal.

    It is bidirectionally incongruous, like any incongruity must be, but which of the two signals might be useless – the World Bank predictions or the bond market? I took you to mean that national bank intervention makes the fluctuations in the bond yields irrelevant as a growth predictor.

    Right?

    Liked by 1 person

  5. And another one.

    Like

    • I am probably the most cynical person on the planet, and I gave the media too much credit.

      I will never look at the MSM the same any more. You simply cannot trust a word they say.

      Like

      • You had to know from minute one that the news reporting on this was bullshit.

        Trump just stripped off what little was left of the largely false veneer of objectivity or interest in being “stewards of the truth”. Even when not ideologically biased, they opine or “report” from a context of narcissism and their own limited, tiny bubbles. Even when not trying to shape a narrative for political purposes, they often don’t know what they are talking about–or avoid certain topics entirely as not to often sponsors or maybe just people they exist with socially.

        That said, post 2016 reporting did change in tenor, and remains changed. Every news station is now opinion “journalism”–there’s no “news” in the news any more, their is narrative shaping and opinions expressed about the quasi-fictional narrative being constructed.

        Like

    • There was already indications of this before Trump even mentioned it–he didn’t just make it up, he was reacting to limited data.

      But they didn’t like Trump. Fine. But having journalists who are not doctors are scientists turn to the camera and go on a minute long rant about about how taking hydroxychloroquine will kill you and how the president is trying to kill people with this recommendation THEY TAKE THIS POISON which happens to be known to be be a safer medication than aspirin, to my knowledge–the media should just be ashamed of themselves. But clearly, they are shameless. And not journalists.

      I mean, not pundits doing this. Talking heads. The people supposed to be delivering the news. I guess nothing should surprise me at this point.

      Like

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