Stocks are lower this morning as the US and Iran exchange fire. Bonds and MBS are down.
Job openings increased to 7.6 million in April, according to the JOLTs job openings report. This is an increase of 731,000. Most of the increase was attributable to a 668,000 increase in professional and business service jobs. Health care and social assistance also increased. The increase in professional and business service jobs is interesting because that sector should be ground zero for AI job losses.
The report was still a mixed bag however. Total hires in April fell by about 400k and the quits rate dipped from 2% to 1.9%.
The private sector added 122,000 jobs in May, according to ADP. Trade, Transportation and Utilities added 36,000 jobs, while professional and business services added 11,000. IT and natural resources fell. “Hiring was more broad-based in May than we’ve seen in the last few years. The labor market continues to show sustained momentum going into the summer hiring season.”
Cleveland Fed President Beth Hammack said the Fed might need to act if inflation doesn’t start falling. “There’s a growing risk that inflation could remain elevated if energy costs do not come down quickly and if businesses feel they have no choice but to raise prices,” Hammack said. “This would be a bad development.”
“Based on the data, I’m more concerned about the growing risks of persistently elevated inflation than the risks to full employment, and that monetary policy may not be sufficiently restrictive to bring inflation down to 2%.”
“It’s not just oil; it’s not just tariffs. It’s health insurance; it’s broader energy prices. There are a lot of underlying material costs, so I’m seeing it in a lot of different places, and that’s what I need to focus on.”
Bill Pulte is has been named to the Director of National Intelligence, replacing Tulsi Gabbard who is resigning. He will supposedly remain in charge of FHFA, but this probably isn’t a good development for those who were hoping for Fannie and Freddie to be released. Pulte is a housing guy, so I’m not sure what he knows about national security. Needless to say, Democrats are nonplussed, remembering his investigation of Fed Governor Lisa Cook over occupancy fraud.
Mortgage applications fell 2.5% last week as purchases fell 3% and refis fell 2%. “The prospect of easing energy prices given the evolving situation in the Middle East brought mortgage rates slightly lower last week. The retreat in rates, however, did not lead to an increase in mortgage applications,” said Joel Kan, CMB, MBA’s Vice President and Deputy Chief Economist. “Purchase applications remained ahead of 2025’s pace but were at its slowest weekly pace since April, and refinance activity was at its weakest since last June.”
