Independence Day in the United States, celebrated on July 4th, marks the anniversary of adopting the Declaration of Independence in 1776. This historic document, mainly written by Thomas Jefferson, declared the thirteen American colonies free from British rule. It was the result of years of growing tensions and conflict with Great Britain, which led to the Revolutionary War. The first Independence Day celebrations included fireworks, parades, and public readings of the Declaration—a tradition that still continues today, symbolizing the spirit of freedom and democracy.

As we celebrated Independence Day yesterday and throughout the weekend, let’s take a moment to reflect on the sacrifices and bravery of those who fought for our freedom. It’s a day to honor our nation’s history and the values of liberty and justice that continue to guide us. Enjoy the festivities with your loved ones, whether you’re watching fireworks, joining parades, or having a family barbecue. Let’s cherish our freedoms and come together in the spirit of unity and patriotism.

Home Loan Rates Improve to Finish the 1st Half of 2024

According to Freddie Mac, 30-year fixed mortgage rates finished the week of June 26th at 6.86%, the best levels since early April. This rate improvement was fueled by weak economic news here and abroad, moderating inflation, global uncertainty, and expectations of a Fed rate cut.

As we move through the second half of 2024, we’ll keep an eye on important inflation and labor market readings. These will determine when the Federal Reserve might cut interest rates. Two new themes to watch in the coming months will be oil prices and the Presidential election. Oil recently touched $84 per barrel, a big jump from $73 just a month ago. Since oil makes up a large portion of headline inflation, higher oil prices could delay a Fed rate cut.

Typically, oil prices and 30-year fixed mortgage rates move together. If oil prices rise, rates tend to go higher. The opposite is also true.

Regarding the Presidential election, we can expect some uncertainty. Bonds and interest rates usually thrive in uncertain times. We’ll see how it unfolds.

Looking Ahead

Next week brings the important Consumer Price Index (CPI). As mentioned, oil prices have risen sharply since early June. If the CPI reading is higher than expected, it could spook bonds and rates. The opposite is also true.

Economic Calendar

Mortgage bond prices are what determine home loan rates. Check out the chart below—it shows a one-year view of the Fannie Mae 30-year 6.0% coupon, where closed loans are being packaged. When prices go up, rates go down, and vice versa.

If you look at the right side of the chart, you’ll see how prices are trying to bounce off the $100 level. This Friday’s Jobs Report and next week’s CPI could really determine the next move for bonds.

Chart: Fannie Mae Mortgage Bond (Friday July 5, 2024)

Economic Calendar for the Week of July 8 – 12