Mortgage Rates Increase for Fourth Straight Week

Mortgage rates continued their upward trek this week, pushing further above 7% ꦇthreshold.

The average for 30-year, fixed-interest rate mortgages rose to 7.17% for the week ending on April 25, the fourth consecutive week rates have moved higher, according to data from 澳洲幸运5官方开奖结果体彩网:Freddie Mac. Rates for the 15-year mortgage also moved higher to come in at 6.44%.&nbs♏p;

The higher mortgage rates come as optimism the Fed𒆙eral Reserve will cut inte𝐆rest rates diminishes. However, there is some evideꦇnce that homebuyers are accꦿepting the increase in already high mortgage rates. 

“Despite rates increasing more than half a percent since the first week of the year, purchase demand remains steady,” said Freddie Mac Chi🌃ef Economist Sam Khater. “With rates staying higher for longer, many homebuyers are adjusting, as evidenced by this week’s report that sales of newly built homes saw the biggest increase since December 2022.”

-Terry Lane

Fed's Favorite Measure Of Inflation Likely Accelerated In March, GDP Report Shows

Thursday’s report on the Gross Domestic Product contained an ominous sign for 澳洲幸运5官方开奖结果体彩网:Friday’s report on inflation. 

Inflation, as measured by the Personal Consumption Expenditures (PCE) price index, rose at an annualized rate of 3.4% in the first quarter, up from 1.8% in the fourth quarter of 2023, the Bureau of Economic Analysis said in the GDP report Thursday. That figure incorporates data on inflation from January and February, which have already been made public, and from March, which won't be released until tomorrow.

The high quarterly figure signals either inflation accelerat🌟ed in March or the figures for previous months were revised upward, economists said.

PCE inflation could be as high as a 0.5% increase in March from Februa♉ry, compared to the 0.3% consensus forecast made before the GDP report, Economist David Rosenberg, founder of Rosenberg Research and A🎃ssociates, posted on social media platform X. 

If that prediction holds up, it would be the highest monthly inflation rate since January 2023. 

Either way, the overheating inflation gauge could discourage policymakers at the Federal Reserve from 澳洲✤幸运5官方开奖结果体彩网:cutting interest rates any time s🤪oon.

“That is not the final nail in the coffin of rate cuts but does leave the Fed in a sort of monetary policy purgatory,” Diane Swonk, 𓆉chief economisꦍt at KPMG posted on X.

Officials at the Fed pay more attention to PCE as a measure of inflation than the Consumer Price Index, which released data for March earlier this month showing inflation stayed 澳洲幸运5官方开奖结果体彩网:stubbornly above the central bank’s target of a 2% annual rate.

Read more about what to expect from tomorrow's PCE report here.

Economists Wade Through Tangled GDP Report

Economists' expectations for 澳洲幸运5官方开奖结果体彩网:gross domestic product (GDP) were nearly double the actual 🍸outcome, surprising many with how much the economy weakened.

It was a mixed bag, as inflation was also higher than expected, stoking some fears that stagflation could b⛦e creeping in.

As of late, economists have struggled to forecast job growth, consumer spending and inflation in recent months, in part because the behavior 🍸of Americans has largely been unpredictable.

We compiled experts' commentary and analysis in the wake of yet another surprising report below.

This post will be updated throughout the day as more analysis is released.

Inventory Data Shows Retailers Are Using Imports to Build Stockpiles

Wholes🥀alers held less inventory in March and retailers used more imports to build up their stocks, which could be the start of a trend that could weigh on U.S. economic growth this year. 

Advance retail inventories moved higher by 0.3% in March compared to February, while 澳洲幸运5官方开奖结果体彩网:wholesale inventories came in lower by 0.4%, according to Census Bureau data.

The advance 澳洲幸运5官方开奖结果体彩网:international trade deficit also rose in March, movin𒈔g higher by 1.7% from February to come in at $91.8 billion. Both imports and exports were༺ lower over the month.

The widening 澳洲幸运5官方开奖结果体彩网:trade deficit helped drag down U.S. GDP growth in the 2024 first quarter🅘, which came in weaker than expected. 

"A slower pace of inventory accumulation, which also dragged on growth, and continued resilience in consumer spending mean import growth is likely to continue outpacing export growth over the rest of 2024, adding to the widening trade deficit, and dragging on growth,” wrote economist Matthew Martin of Oxford Economics.

Inventory data helps to measure consumer demand, as spending is one of the larg꧅est drivers in the economy. 

-Terry Lane

The Fed is Looking For a Slower Economy—But Not One With Higher Prices

Today's measure of the economy in the first quarter showed that the Federal Reserve's interest rate hikes might be taking root, just not on inflation.

For the last nine months, the Fed has held interest rates at a two-decade high to quash price increases. The Fed wa🍸nts high interest rates to cause consumers and businesses to pull back on spending so prices will come down. However, officials are trying to strike the right balance by slowing down the economy (and, with it, prices) without tipping it into a recession.

"This report was the worst of both worlds: economic growth is slowing and inflationary pressures are persisting," wrote Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. "The Fed wants to see inflation start coming down in a persistent manner, but the market wants to see economic growth and corporate profits increasing, so if neither are headed in the right direction then that’s going to be bad news for markets."

Markets indeed roiled at the report, which stoked fears of 澳洲幸运5官方开奖结果体彩网:stagflation. The S&P 500 is down 1.5% in early trading, the Nasdaq is down 1.89% and the Dow▨ fell similarly.

Today's report complicates an already murky outlook for Federal Reserve officials, who tempered expectations for an imminent rate cut in recent weeks. Fed officials have said they are waiting for data to give them confidence that inflation is firmly on the path down to 2%, and Thursday's data cut the wrong direction.

After the report, traders' expectations of a rate cut in June, which were already low at 16.5%, fell to 9.5%, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

Read more about the economic growth report here.

Inflation Measure in Economic Growth Report Rattles Markets

Stocks tu🥃mbled pre-market as some investors zeroed in on the measure of price incr♋eases in the GDP report.

Personal consumption expenditures (PCE) price index for the first quarter rose 3.4%, compared to the fourth quarter's increase of 1.8%. Even without volatile food and energy prices, prices rose 3.7%.

Inflation on goods fell less quickly in the first quarter than the one prior, while prices for services grew more quickly. This report comes ahead of March's individual PCE report which will be released tomorrow. It will provide more details on where inflation is resisting the Federal Reserve's rate hikes designed to fight it.

Gross Domestic Product Surprises By Coming in Far Lower Than Expected

The real GDP—an inflation-adjusted 澳洲幸运5官方开奖结果体彩网:measure of the country’s e𒀰conomic output compiled by the Bureau of Economic Analysis (BEA)—grew at an annual rate of 1.6% in the first quarter. That surprised economists whose average call was for 2.2% growth, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal.

That is a significant slowdown from the 澳洲幸运5官方开奖结果体彩网:3.4% growth rate in the fourth quarte✤r and below the 2.4% average annual rate in the 10 years leadiღng up to the pandemic.

The slowdown was largely due to decelerations in exports as well as consumer and governme🎀nt spending, the BEA said.