Stocks are mixed and Mortgage Bonds are slightly lower so far this morning. Oil prices are at their lowest level in two months, trading around $85/barrel.
Yesterday, there was renewed optimism over a peace deal with Iran. President Trump called off additional strikes on Iran because he believes a deal is very close. He said that a deal has been agreed to in principal and great detail, and could be signed on Sunday.
The details that have been reported include fully reopening the Strait of Hormuz without tolls, and would extend the ceasefire another 60 days to come to a complete resolution. But the talks of Iran’s enriched uranium appear to not be a part of the agreement initially, and would be hashed out over the next 60 days. We have heard potential deals like this before, but this does appear to be the closest the US and Iran have come and the market is reacting.
SpaceX’s IPO (Initial Public Offering) goes live today and is the biggest IPO in history, with the company valued at around $1.8T. The performance of SpaceX today could have a big impact on the overall stock market and can impact real estate through the wealth effect.
SpaceX is oversubscribed by 4x, and if it pulls the overall Stock market higher, it will help with the “wealth effect” where those who own Stocks will feel wealthier and they often spend more as a result. If it does not do well, and it brings stocks lower, the opposite could also be true. The SpaceX IPO is also important as a precedent for OpenAI and Anthropic, who are planning on launching their IPO’s potentially later this year/next year.
Atlanta Fed Wage Tracker
The Atlanta Fed released their wage tracker for May, showing that overall wage increases decelerated from 3.6% to 3.5% year over year.
Job stayers, which makes up roughly 90% of the labor market and measures those staying in their same job, rose 3.3% year over year…but that’s down from 3.6% in April.
Job switchers, or those changing jobs, saw their pay increase at 3.7%, which is down from 3.8%.
While wages are still going up, they are doing so at a slower pace, and not keeping up with inflation. The CPI report showed overall inflation at 4.2%, which means that real wages are negative and is not a good sign for the economy.
If oil prices and inflation decline, potentially from a peace deal with Iran, positive real wages could return.
Week Ahead
Monday: Industrial Production & Capacity Utilization
Tuesday: ADP Weekly Employment, Housing Starts, 20-year Bond Auction
Wednesday: Mortgage Apps, Retail Sales, Pending Home Sales, Fed Meeting
Thursday: Jobless Claims
Technical Analysis
Mortgage Bonds broke above their 25-day Moving Average yesterday, and are now trading in the middle of a range between the 25-day and overhead resistance at the 50-day.
The 10-year closed beneath the 25-day yesterday, and are now in a new range with the next floor of support at the 50-day. Yields are higher this morning and are testing the 25-day as resistance currently.
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