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Florida Mortgage Update

The top market headline this morning is that the Dow Jones and S&P 500 stock indices have hit all-time highs this morning based upon strong corporate earnings and positive GDP growth for the U.S. economy for the second quarter. Of the 195 companies in the S&P 500 who have reported their second quarter earnings, 91% have reported better than expected earnings. The second quarter GDP estimate shows positive growth for the quarter at 6.5%, but this was lower than the 8.5% number that the markets had expected.

The Dow Jones is currently up 0.61%, the S&P 500 is up 0.62%, and the Nasdaq is up 0.32%. Guild’s stock price is down eleven cents to $15.89. In the bond markets, MBS prices dipped yesterday after the Fed’s press conference and rallied yesterday afternoon. Current prices are about flat to yesterday’s closing price levels. The 10-year Treasury bond yield is1.254% which is up about two basis points from this time yesterday.

Federal FOMC Meeting. The Federal Reserve concluded their two-day Federal Open Markets Committee (FOPMC) meeting yesterday with no surprise announcements. Fed

Chair Jerome Powell stated that the Fed will continue their monthly buying of $80 billion of Treasury bonds and $40 billion of MBS, and he did not provide any further insight into when they may begin to taper these purchases, other than to say the topic was initially discussed in their June meeting. The next Fed meeting is scheduled for August 26-28 in Jackson Hole, Wyoming and market investors are wondering if this may be the right time for the Fed to begin to provide clarity regarding the timing of tapering.

Second Quarter GDP. The initial estimate of the U.S. economy’s Gross Domestic Product (GDP) for the second quarter of 2021 came out today at 6.5%, which was below the market’s prediction of a 8.5% number, but better than the first quarter number that was just revised down to 6.3%. Even though this was lower than expected, it still reflects two quarters of growth for 2021, and shows strong economic growth as the economy continues to recover.

Weekly Unemployment Claims. The weekly initial jobless claims report came out showing 400,000 new claims filed last week, which was higher than the market’s expectation of a 380,000 number, but a slight reduction from the prior week’s 424,000 number. The net impact of the above news was a slight positive for stocks, entirely driven by the strong earnings reports and a neutral Fed meeting impact. Bonds are mostly flat as MBS investors await updated timing on the Fed’s tapering, possibly 30 days from now when the next FOMC meeting will be held.

Tomorrow’s Reports. There will be two scheduled reports tomorrow that could drive stock and bond prices: University of Michigan Consumer Sentiment. The July survey is expected to show an 80.8 index, flat to June’s 80.8 number. Personal Consumption. Several reports related to personal consumption will be released, with the markets keying in on the June Personal Consumption Expenditure index which is expected to show consumer consumption increased by 0.6% for the month of June.

This Market Update and similar such communications are for informational purposes only and are based on publicly available information. These materials are general communications, which are not impartial, and are provided solely for discussion purposes, and not in connection with any product or service offering. The opinions and views expressed in this Market Update are as of the date of this communication and are subject to change. Any forward-looking views and statements contained in this Market Update are based on current estimates or expectations of future events or results. Actual results may differ materially from those described in this Market Update. The views expressed in this communication should not be attributed to Guild Mortgage Company as a whole and may not be reflected in the strategies and products offered by Guild Mortgage Company.

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