Overview:  We had a net change of just 4 basis points.  Generally, it takes around a 21 basis point movement for rates to be impacted.  We traded in a very narrow range with significant resistance at our 50 day moving average.

Taking it to the House: Weekly Mortgage Applications jumped by 5.1%. Refinances led the way with a 6.0% increase. Purchase applications increased by 4.0%.  Existing Home Sales were close to expectations (5.43M vs est of 5.52M) in May. As usual, tight inventory and rising prices are restricting sales at higher levels. May Housing Starts were stronger than expected with a seasonally adjusted annualized pace of 1.350M Units. When you strip out the multi-family sector, SFR saw a 3.9% increase with a 936K pace. Building Permits were lighter than expected with a pace of 1.301M units. SFR Permits decreased by 2.2% with a 844K pace.

The Talking Fed:
Fed Chair Jerome Powell said that there is robust growth and a generational low in unemployment. In his prepared remarks the said “Earlier in the expansion, as the economy recovered, the need for highly accommodative monetary policy was clear, but with unemployment low and expected to decline further, inflation close to our objective, and the risks to the outlook roughly balanced, the case for continued gradual increases in the federal funds rate is strong.”

Trade Wars: After last week’s $50B in tariffs, President Trump directed the U.S. Commerce Department to identify $200 billion worth of China goods for an additional 10% of tariffs. China said that it would respond “in-kind” but they cant as they purchase less than $200B worth of goods from the U.S. Actually, when you back out the $50B that they have already announced, that would leave only $150B that they could issue tariffs on but they don’t buy that much from us…so it is unclear as to how they could match the U.S. tit-for-tat.