Fed Pause Imminent
The Fed's next meeting is tomorrow, June 14, and the big question is whether it will continue raising interest rates. The CME predicts a 96.5% chance of a pause, but the market is still on edge as the Fed's dot plot could hint at a "higher for longer" rate forecast for the upcoming year or two.
⭐️ Check This Out
- It's now a 'seller's market' according to Fannie Mae, while 81% of renters feel like they're in a reality game show titled 'Mission Impossible: Mortgage Edition.'"
- Dollar bills are the new house keys, with a third of buyers paying in cash according to Redfin; hitting a nine-year high.
- Surging demand and competition drive the strongest monthly home value growth since last June.
- Jobless claims are up - just a minor blip in our 'healthiest part of the economy'.
- Higher rates, tighter credit, and low inventory - the holy trinity of housing market nightmares.
📊 Market Update
Last week's big news was a report from the Institute of Supply Management (ISM). It showed the services sector — think restaurants, salons, hotels, and so forth — showing less strength than forecasted. The index dropped to 50.3, compared to the expected 52.0, the lowest since December 2022. Still, anything above 50 means growth, so it's not all bad news.
Inflation numbers also dropped today; marking one of the key events of the week with the unveiling of core CPI (Consumer Price Index) figures. These came in right on the money, lining up with the anticipated rise of 0.4%. In contrast, headline inflation took a steeper-than-expected tumble to 0.1%, from the projected 0.2% and the last 0.4% figure.
Will The Fed Pause?
Throwing a fresh twist into the scenario, a morning Wall Street Journal article added a new piece to the puzzle. WSJ believes that the CPI figures for today won't significantly sway the odds of a rate increase (or a 'skip') for tomorrow. Yet, the stagnant core services inflation might prompt the Fed to hint at a "higher for longer" rate forecast for the upcoming year or two via the dot plot.
It's like having a test you thought you aced, but then the teacher hands it back with a "see me after class" note.
The Fed's next meeting is tomorrow, June 14, and the big question is whether it will continue raising interest rates. The CME's FedWatch Tool is showing a 96.5% probability of a pause, with a 3.5% chance of a rate hike.
🗓️ Economic Calendar
Tuesday
- CPI - measures the change in the price of goods and services from the perspective of the consumer.
- Core CPI - measures the changes in the price of goods and services, excluding food and energy.
Wesnesday
- Fed Rate Decision- members vote on where to set the Fed's next target rate.
Thursday
- Fed Waller Speaks - Federal Reserve Board of Governors member Christopher Waller speaks about the economy and monetary policy.
- Initial Jobless Claims - measures the number of individuals who filed for unemployment insurance for the first time during the past week.
- Retail Sales - measure the change in the total value of sales at the retail level.