BankerMatch.com Weekly Market Update

The Fed Stays Steady and Inflation Eases: Key Takeaways from Last Week

The Federal Reserve has once again held rates steady, offering some optimism for the economic outlook. With tamer-than-expected consumer and wholesale inflation for May and a significant rise in unemployment claims, here are last week's highlights:

Fed Holds Rates Steady, Signals One Rate Cut in 2024

The Federal Reserve has left its benchmark Federal Funds Rate unchanged at 5.25% to 5.5%, marking the seventh consecutive meeting without a rate change. Fed Chair Jerome Powell indicated that while inflation has cooled, it remains above the 2% target. A single rate cut is anticipated in 2024, but this could change based on upcoming data.

Consumer Inflation Takes a Step Back

May's Consumer Price Index (CPI) revealed cooler-than-expected inflation. The annual reading dropped from 3.4% to 3.3%, with the Core CPI, excluding food and energy, also showing a decline. This trend suggests that inflationary pressures are easing, a positive sign as we move further into the year.

Wholesale Inflation Numbers Also Favorable

The Producer Price Index (PPI) for May showed a decrease, with the headline PPI falling by 0.2% and the annual reading dropping to 2.2%. Core PPI remained flat, indicating that inflation on the wholesale level is also cooling down, which could lead to a favorable Personal Consumption Expenditures (PCE) report later this month.

Jobless Claims Hit a 10-Month High

Initial Jobless Claims rose significantly, with 242,000 new unemployment claims filed, the highest in ten months. Continuing claims also increased, suggesting a slowdown in hiring. This trend will be closely monitored by the Fed as it considers future monetary policy actions.

Small Business Optimism Sees Modest Improvement

The NFIB Small Business Optimism Index rose to 90.5 in May, the highest this year but still below the historical average. Persistent concerns about inflation remain, but the recent cooling in inflation rates is a hopeful sign for small business owners.

Upcoming Highlights

Keep an eye out for key housing data this week, including updates on home builder sentiment, Housing Starts, Building Permits, and Existing Home Sales. Retail Sales and Jobless Claims will also be reported, along with manufacturing updates from the New York and Philadelphia regions.

Attention Mortgage Professionals:

Feeling stagnant in your current role? BankerMatch.com is your gateway to finding the best mortgage companies and opportunities that align with your career goals.

Transform Your Career with our expert matching services and take your professional journey to the next level.

Visit BankerMatch.com and discover the possibilities!

*Source: MBS Highway Marketing Newsletter (6/10/2024)