Market Update: Rates Rise and Inflation Remains Stubborn; Home Prices and Jobs Data Coming Up This Week

Blog posted On May 29, 2023

Mortgage rates trended higher last week after the markets realized that the Federal Reserve may need to keep the benchmark rate higher for longer. This comes in the wake of recent economic data that has been stronger than expected, including recent inflation reports.

The core personal consumption expenditures (PCE) index is the Fed’s preferred method of gauging inflation levels. On Friday, this report showed that May’s inflation levels were stronger-than-expected, rising 0.4% month-over-month vs the 0.3% expected increase. Annual core inflation rose 4.7% vs 4.6% expected. Furthermore, consumer spending was double what experts had predicted in May, rising 0.8% vs. 0.4% expected. All of these data trends point to the common consensus that the Fed may have to hike the benchmark rate one more time and hold rates higher for longer in order to combat stubborn inflation.

Coming up this week, we have another highly watched data set slated for release: the jobs reports. The jobs reports have recently become a bigger player in influencing rate trends since the Fed has been looking for a weaker jobs market. The jobs reports include April’s Job Openings and Labor Turnover Survey (JOLTS), scheduled for release on Wednesday, the ADP nonfarm employment change, scheduled for the following day, and what’s known as the ‘employment situation’ on Friday. Stronger data from these reports could lead to higher-trending rates, while weaker data could help balance out recent spikes.

If you have any questions about the upcoming reports or rate trends, let us know!

Sources: Bloomberg, Mortgage News Daily