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After a rough start to the week, the equity markets are getting somewhat of a reprieve today, but that could change before the market closes. The Federal Open Market Committee (FOMC) will release the minutes from its previous meeting (three weeks ago), and the comments certainly have the potential to move the markets drastically in either direction. Other than this approaching speed bump, the economic news has been relatively light during today's session.

We note that yesterday afternoon, Federal Reserve reported that consumer credit increased $19.6 billion in May, following a revised gain of $26.1 billion in April. Gains for revolving credit, increased $1.8 billion in the month, following an $8.8 billion surge in April. We observe that this points to really strong credit card use which is a huge bonus for retailers. Non-revolving credit, up $17.8 billion, continues to be driven by car loans (evidenced by the increase in auto sales over the last two months) as well as the government's acquisition of student loans. Below is a chart of non-revolving versus revolving credit since 2000. The divergence of credit in the past 15 years has been rather interesting.

Early this morning the Mortgage Bankers' Association (MBA) Index showed that mortgage applications for home purchases rose 4.0% in the week ended July 4, but we note that this is after a recent run of soft readings. Year-on-year, purchase applications remain very weak and are down 17.0%, however applications for refinancing edged 0.4% higher in the week. We note that 30-year conforming loans ($417,500 or less) were affected by an increase in mortgage rates last week; up 4 basis points to an average 4.32%. Additionally, talks that there will be further increases in mortgage rates, which are tied to a less stimulating Federal Reserve policy, may begin to pull mortgage demand forward this summer. However, we might get a broader outlook of the economy from the FOMC minutes in a few hours.