Mortgage Rates Lost Ground, Six-Figure Earners Living By The Paycheck, & The Battle Of AI's Has Arrived | (2.6.23)
"It is only the modern that ever becomes old-fashioned." - Oscar Wilde
What You Need To Know This Afternoon:
• Last Friday’s jobs report was surprisingly strong with unemployment coming in at 3.4% — below the pre-release market expectation of 3.6% as well as last month’s reading of 3.5%.1 On the surface a lower unemployment rate might seem like a good thing, however, it is also a signal to the market that the Fed will likely take further hawkish policy action. Essentially, a strong labor market indicates to the Fed that it can further aggressively raise rates to fight inflation without worrying that doing so will harm the economy at large. As result, the U.S. bond market (which is a major factor in day-to-day interest rate changes) has traded down sharply with a loss of 0.55% today alone at the time of writing this. Further, mortgage lenders have taken action by raising interest rates. In fact, over the past few days, the average 30-year fixed-rate mortgage in the U.S. has jumped by between 0.25-0.50%.2
TL;DR — A strong jobs report leads to higher interest rates as the market anxiously anticipates the Fed’s next moves.
• According to a new survey conducted by Lending Club and Pymnts.com 50% of Americans who earn more than $100,000 per year have self-reported that they are living paycheck to paycheck.3 This figure has grown approximately 9% from a year ago when 42% of six-figure earners made the same claim. Moreover, across the entire United States population (all income brackets), 64% of consumers (~166 million people) reported that their budgets are razor-thin month over month. This was up 3% (~9.3 million people) from a year ago. Reports like this one clearly show why none of us should be envious of the Fed’s role in attempting to control inflation without putting the economy into a tailspin. Despite inflation cooling slightly over the past few months it still remains far above historical averages and is creating serious pressure on U.S. households…
TL;DR — Earning $100k per year is not what it used to be as millions of Americans in that earning bracket are living paycheck to paycheck.
• This one is short and sweet. Google has announced its new AI “Bard” as a response to OpenAI’s “ChatGPT:” which became the most rapidly adopted technology service of all time. Following this report from Google, Microsoft quickly announced a “surprise” event being held tomorrow (2.7.23) during which it is expected to outline its partnership with OpenAI and ChatGPT for Bing.
TL;DR — Let the AI development games begin?
Chart Of The Day:
Mark Zuckerberg wants to remind all of us that he is the king of social media platforms (even if almost none of us like it)…4
Source: U.S. Bureau of Labor Statistics — Employment Situation Summary.
Source: Mortgage News Daily.
Source: Lending Club & Pymnts.com — 9.3 Million More U.S. Consumers Ended 2022 Living Paycheck to Paycheck Than in 202.
Source: Chartr — Facebook Isn't Dead.