Vital Statistics:
Stocks are flattish as earnings continue to come in. Bonds and MBS are down small.
Retail Sales rebounded in June, according to the Census Bureau. They increased 0.6% in June after falling 0.9% in May. On a year-over-year basis retail sales rose 3.9%. These numbers are not adjusted for inflation, so on an inflation-adjusted basis retail sales rose about 1.2%.
There was a rumor going around yesterday that Trump intended to fire Jerome Powell for not lowering interest rates. He poured cold water on that idea, saying: “We’re not planning on doing anything,” Trump told reporters at the White House, adding later, “I don’t rule out anything, but I think it’s highly unlikely. Unless he has to leave for fraud.”
Treasury Secretary Scott Bessent said earlier this week that the Administration had no intention of firing Powell, although they are beginning to search for his successor. Powell’s term ends in early 2026.
Has a Federal Reserve Chairman ever been fired before? No. The closest a Fed Chairman came to getting fired was G. William Miller, who served for a year under Jimmy Carter amid a massive spike in inflation. Carter didn’t fire him, but he was kicked upstairs (i.e. reassigned) to Treasury and Carter appointed Paul Volcker to replace him.
Mortgage credit availability decreased in June, according to the MBA. “Credit availability decreased in June after six months of growth, primarily led by fewer programs with low minimum credit scores,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “There was also a reduction in streamline refinance programs. With the job market softening, and increasing mortgage delinquency rates, some lenders are tightening up their credit offerings. Jumbo credit availability decreased slightly overall relative to the previous month, but the availability of non-agency loan programs increased slightly.”
The index began in around 2011, so it doesn’t cover the pre-GFC days. CoreLogic reconstructed the index to fit in those days, and it peaked at something like like 868 in 2006, back when anyone who could fog a mirror could get a mortgage. It was 8 times easier to get a mortgage back then.
Economic activity expanded “slightly” from late May to early July, according to the Fed’s Beige Book. Employment increased “very slightly” over this period and hiring remains “cautious.” Many employers are exploring the use of AI to reduce the need for hiring.
Prices increased either “modestly” or “moderately: Prices increased across Districts, with seven characterizing price growth as moderate and five characterizing it as modest, mostly similar to the previous report. In all twelve Districts, businesses reported experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction. Rising insurance costs represented another widespread source of pricing pressure. Many firms passed on at least a portion of cost increases to consumers through price hikes or surcharges, although some held off raising prices because of customers’ growing price sensitivity, resulting in compressed profit margins. Contacts in a wide range of industries expected cost pressures to remain elevated in the coming months, increasing the likelihood that consumer prices will start to rise more rapidly by late summer.
