Mortgage activity plunges, inflation pressures remain high, and the job market stabilizes
* Higher rates = Lower mortgage demand. The Mortgage Bankers Association's application index tanked to its lowest level in six years in the week of May 30. The index hit 502.3, down 15.3% on the week to the lowest since April 2002. Purchases fell 5.4% while refis plunged 25.7%. The average rate on a 30-year fixed loan climbed to 6.17% from 5.96%, its highest level since the week of March 7.
* The Institute for Supply Management's service sector index dipped a bit in May -- to 51.7 from 52 in April. But that was a bit better than the 51 reading that was expected. New orders perked up to the highest level since December, but employment dipped slightly. Also noteworthy: The "prices paid" subindex climbed to 77 from 72.1 a month earlier. That's the highest since September 2005 (right around the time Hurricanes Katrina and Rita struck).
* ADP Employer Services actually had some mildly encouraging news on the job front. The company said U.S. companies added 40,000 jobs in May. Economists were expecting a 30,000-worker loss. The "official" employment report doesn't come out until Friday (the consensus estimate: -60k), but if ADP is right, we could catch an upside surprise.
The dollar and bonds have been all over the map -- up a bit, down a bit, etc. One reason why the bonds probably aren't selling off even harder (given the decent fundamental data on the economy) is all the renewed credit concerns, particularly those centered on Lehman Brothers.