US mortgage rates hit their highest level in 7 months, as investors begin to mull the possibility of another Fed rate hike following slowing job growth.
Oil prices remain lower, thanks to cheap Iranian oil flooding the market, while Binance struggles with an exodus of executives as regulatory scrutiny heats up.
The biggest headline this week however, is Meta’s launch of Threads, as the tech company takes on Twitter.
Here is a rundown of the articles that made headlines this week in global financial markets.
Mortgage rate hits highest point since November
The average rate on the popular 30-year fixed mortgage hit 7.22% last week – its highest level since early November.
In the past week alone, the 30-year fixed mortgage rate has increased by 31 basis points. The principal and interest payment for a borrower taking out a $400,000 mortgage increased from $2,637 to $2,720 per month in just one week.
Mortgage rates largely follow the yield on the 10-year Treasury, which spiked after an ADP jobs report that was far greater than anticipated.
After signs from Federal Reserve Chairman Jerome Powell that the central bank may resume raising interest rates after a break in June, rates already started to rise last week.
US hiring slows more than expected in June
US Jobs growth slowed more than expected in June sending signals that the Federal Reserve’s aggressive interest rate rises are beginning to cool the labor market.
In contrast to economists’ expectations of 225,000 new non-farm jobs, the US economy added 209,000 new non-farm positions last month. Additionally, the growth for April and May was downgraded by a total of 110,000.
However, despite a modest increase in May, the unemployment rate dropped back to 3.6%, remaining close to a multi-decade low. Additionally, wage growth was higher than anticipated, coming in at 4.4% on an annual basis.
Meta launches Twitter rival
Meta, owner of Facebook, Instagram and Whatsapp launched Threads on Wednesday. Threads is a microblogging platform meant to rival Twitter. The new app came out after Twitter did the unexpected by limiting the number of posts users could read at once.
Within 24 hours of the launch, more than 30 million people signed up, shooting Threads to the top of the charts for app store downloads.
Twitter – through its lawyer – wrote a strongly worded letter about the launch, accusing Meta of poaching Twitter workers to help build Threads.
More older Americans rolling the dice in stock market
More senior citizens are taking a chance in the stock market instead of sticking more of their money in bonds to protect their retirement savings.
Over half of Vanguard 401(k) participants aged 55 and above have more than 70% of their portfolios in equities. Compare this with 38% that did so in 2011. Nearly four out of ten investors at Fidelity Investments between the ages of 65 and 69 have at least two-thirds of their portfolios invested in stocks.
And not just baby boomers are affected. One-fifth of investors 85 and older who have taxable brokerage accounts at Vanguard have nearly all of their assets in stocks, up from 16% in 2012. The same is true for roughly 25% of people between the ages of 75 and 84.
UPS workers may go on strike
United Parcel Service could be facing a strike after its talks with the Teamsters fell through.
The package delivery giant and the International Brotherhood of Teamsters, a union representing approximately 330,000 employees, stated that labor negotiations had stalled and accused each other of abandoning contract negotiations.
In North America, the UPS-Teamsters contract is the largest private-sector collective bargaining agreement.
The Teamsters-represented employees voted to authorize a strike if a new contract is not reached, a work suspension that could disrupt the supply chains of numerous businesses. August 1997 was the last time Teamster-represented UPS employees went on strike.
Iran’s cheap oil sends oil prices lower
Iran has recently increased its oil exports to levels not seen in five years as it sells more to China and other nations, bringing massive amounts of cheap oil to a struggling global energy market.
In the last two months, Iran shipped an average of 1.6 million barrels of oil per day. This is the greatest level seen since 2018, when the reimposition of U.S. sanctions sparked a decline, and it is more than double the level of just over a year ago.
The increase in Iran’s oil supply poses a threat to Saudi Arabia and other major crude producers’ efforts to boost prices by reducing output. Since late last year, oil’s value has decreased by roughly one-fifth due to expectations of a declining global economy and an abundance of inexpensive Russian cargoes.
High-profile resignations signal rift in Binance
Binance has been hit by a wave of high-profile resignations, an indication of internal turmoil within the biggest cryptocurrency exchange. In the past few weeks, the general counsel, Chief Strategy Officer, Head of Investigations, and a Senior Vice President for Safety all left the company.
The Justice Department is looking into whether or not Binance did enough to stop money laundering.
A reason for the wave of resignations and ‘layoffs’ from Binance is allegedly tied to frustrations from the company’s executives who have worked hard to clean up Binance’s reputation and settle disputes with law enforcement.
However, that work could be undone if the Justice Department files criminal charges against the company and its founder Changpeng Zhao, who has maintained that the wave of resignations are not a sign of trouble within the company.