Morning Report: Weak jobs and confidence data perks up bonds

Vital Statistics:

Stocks are flattish this morning on no real news. Bonds and MBS are up on the weak JOLTS report.

Job openings fell pretty dramatically in July, according to the JOLTS report. Job openings fell by 338,000 to a seasonally adjusted level of 8.8 million. On a year-over-year basis, openings are down 2.5 million.

Job openings fell in professional and business services, health care and social services and government. The quits rate edged down to 2.3%, as quits fell by 250k.

The Fed pays close attention to the JOLTs number and this is a big sign than the Fed’s tightening regime is finally gaining some traction in the labor market.

Consumer confidence fell pretty dramatically in August, according to the Conference Board. “Consumer confidence fell in August 2023, erasing back-to-back increases in June and July,” said Dana Peterson, Chief Economist at The Conference Board. “August’s disappointing headline number reflected dips in both the current conditions and expectations indexes. Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular. The pullback in consumer confidence was evident across all age groups—and most notable among consumers with household incomes of $100,000 or more, as well as those earning less than $50,000. Confidence held relatively steady for consumers with incomes between $50,000 and $99,999.”

There is a pretty big gap between what consumers feel about their current situation and how they perceive the future.

Bonds seem to like the economic numbers this morning, with the 10 year yield moving sharply lower.

Home prices rose 3% YOY in the first quarter, according to the FHFA House Price Index. They rose 1.7% compared to the first quarter. The areas that lagged the previous boom are now experiencing robust gains, while the Mountain and Western states are seeing stagnation.

Based on the three quarters ending in June, the new conforming loan limit would be about 747k.

The Case-Shiller Home Price Index rose 0.9% MOM in June, which was flat compared to a year ago. The index noted the same regional split: “Regional differences continue to be striking. On a year-over-year basis, June’s three best-performing cities were Chicago (+4.2%), Cleveland (+4.1%), and New York (+3.4%) – the same three that had topped our May leader board. At the other end of the scale, the worst performers continue to be in the Pacific and Mountain time zones, with San Francisco (-9.7%) and Seattle (-8.8%) at the bottom. The Midwest (+2.8%) continues as the nation’s strongest region, followed this month by the Northeast (+1.6%). The West (-5.9%) remains the weakest region. As the great philosopher Huey Louis said, its hip to be square.