Williams, Bostic Downplay Rate Cuts in Public Remarks

Federal Reserve officials contin🧔ued to downplay expectations on rate cuts, with Atlanta Fed President Raphael Bostic and New York Fed President John Williams arguing that more progress on inflation was needed before bringing down borrowing costs.

In remarks to Prosperity Partnership Fort Lauderdale, Bostic said the Federal Reserve likely wouldn’t cut rates until later in the year, pointing to data showing🎃 continued strength in the U.S.🍌 economy.  

“I’m not in a mad dash hurry to get there, if all of these other good things are happening,” Bostic said about rate cuts.ℱ

Bostic’s remarks were consistent with 澳洲幸运5官方开奖结果体彩网:comments he made a week earlier, where he forecasted only one rate cut in 2024 that would come in the year’s final quarter. During the most recent meeting of the Federal Reserve, officials forecasted that the central bank could cut rates 澳洲幸运5官方开奖结果体彩网:as many as three times.

In his comments during Semafor’s World Economy Summit, Williams offered less certainty on the timing of rate cuts but said he believed that inflation remained on a path towards the 2% target.

“I think we have interest rates at a place that is moving us gradually to our goals,” Williams said. “Interest rates will need to be lower, at some point, but thဣe timing of that is driven by the economy.”

-Terry Lane

Drop in Leading Economic Indicators Shows Continued Economic Uncertainty

The Conference Board’s 澳洲幸运5官方开奖结果体彩网:Leading Economic Index (LEI) ticked lower in March to decline to 102.4, giving back澳洲幸运5官方开奖结果体彩网: gains it reported last month and showing the economy remains on an uncertain path. 

Over the six months starting in Septemb🌜er, the LEI shrank by 2.2%, a smaller jump than in the six months prior. However, it remains above levels that could indicate 🎐a recession is coming.

“Overall, the index points to a fragile—even if not recessionary—outlook for the U.S. economy,” said Justyna Zabinska-La Monica, the Conference Board’s senior manager of business cycle indicators. “Indeed, rising consumer debt, elevated interest rates, and persisteꦅnt inflation pressures continue to pose risks to economic activity in 2024.”

The report pointed to 澳洲幸运5官方开奖结果体彩网:lower yields on Treasury bonds, fewer building permits, declining consumer expectations and a slow-down in new orders as some of the factors dragging d▨own the LEI. On the other hand, rising stock prices helped minimize the declines in the index. 

Coming after it moved higher for the first time in almost two years, the slip in the LEI shows that interest-rate sensitive sect𝕴ors may continue to be struggling. 

“The teetering is illustrative of rising uncertainty on the path of the U.S. economy in the coming year,” wrote Wells Fargo economists Tim Quinlan and Nicole Cervi. “Overall, the mixed signals from the LEI's components point to activity in interest-rate sensitive sectors wavering in anticipation of lower borrowing costs this year.”

-Terry Lane

Mortgage Rates Top 7% As Hope For Imminent Fed Funds Rate Cuts Fade

The average interest rate on a 30-year, fixed-rate mortgage rose to 7.10% this week, according to Freddie Mac. That's up from 6.88% in the prior week and up from 6.39% this time last year.

The rate jump ♛comes as persistent inflation has caused 🌸forecasters and some Federal Reserve officials to push the timeline for when rate cuts will occur. The fed fund rate is highly influential and impacts mortgages as well as auto loans and other types of credit.

Investors are losi🥀ng hope that c🐻uts to the fed funds rate are imminent and many forecasts now predict only one rate cut later this year. That could cause mortgage rates to rise.

“As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year," said Sam Khater, Freddie Mac’s chief economist in a prepared statement. "Last week, purchase applications rose modestly, but it remains unclear how many homebuyers can withstand increasing rates in the future.”

More Homes Went Up For Sale In March

For-sale listings got a boost in March but found fewer buyers as high mortgage rates kept their chokehold on the housing market.

The number of homes for sale rose for a third month in a row, to 1.11 million from 1.06 million in February, reaching the most since𝓀 November, the National Association of Realtors said Thursday. However, the slight uptick in inventory wasn’t enough to spur sales, which fell 4.3% from February.

The new data showed the market is s🐲till being stifled by high mortgage rates. With the average rate for a 30-year mortgage nearing 7% last week, homeowners remain reluctant to sell and give up mortgages they locked in years ago when rates were low. Although the number of homes for sale was up 14% from a year ago, they were well below the 1.7 million typically on sale that month pre𝓡-pandemic. 

Read more about the number of homes for sale and how it's impacting the market here.

Philadelphia-Area Manufacturing Jumps in April, Prices Move Higher

Manufacturing activity in the Philadelphia area 澳洲幸运5官方开奖结果体彩网:continues to trend higher, with an index measuring the industry coming in positive for the third consecutive month and posting its highest reading since April 2022.

The Philadelphia Federal Reserve’s Manufacturing Business Outlook Index jumped 12 points to reach 15.5 in April, with more than a third of firms reporting an increase in activity. The survey of 澳洲幸运5官方开奖结果体彩网:manufacturing firms in an area that includes Delaware and parts of Pennsylvania and New Jersey also showed that new orders and shipments rose iౠn April. 

There were also indications of price increases, with the prices paid index delivering its highest reading since December. In the survey, 26% of firms reported paying higher prices, and 12% said they raised the prices of the goods they produced. 

-Terry Lane