Rates Top 7%, Stifling Applications

Rising rates sent mortgage applications spiraling last week, sidelining homebuyers and forcing refis to a standstill. The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – decreased by 10.6%, piling onto the week prior’s 2.3% dip. Adjusted purchase applications slipped by 10%, while the unadjusted index was down by 6% and was 13% lower YOY. Rates shot up to 7.06% on the heels of less-than-ideal inflation data from January. The Fed’s preferred inflation index came in hotter than expected for January, and Wall Street pared back its bets on rate cuts from the Central Bank, now predicting they won’t come until at least May. “The much-anticipated CPI report is…

June’s Inflation Slip Bodes Well For Homebuyers

Inflation cooled significantly in June, increasing by only 3% YOY, according to the Fed’s preferred inflation measure, the Consumer Price Index. This is down from a 4% increase the month prior and fully a third less than its peak at nearly 9% last year. June’s data suggests it’s possible for the U.S. to make a “soft landing” and reach its 2% inflation target without throwing the economy into recession. But it may yet be too early to celebrate. “This is very promising news. The pieces of the puzzle are starting to come together,” Laura Rosner-Warburton, senior economist and founding partner at MacroPolicy Perspectives, told the New York Times. “But it’s just one report, and the Fed has been burned by…

Some Analysts Still Hawkish Ahead Of June FOMC Meeting

The Federal Open Market Committee’s June meeting is just around the corner, and while most experts think the Fed will pause its rate increases, others are wary. Most analysts expect the Central Bank not to introduce another rate hike at the meeting, scheduled for June 13-14, according to a poll of economists from Reuters. More than 90% of those polled, 78 of 86 total, don’t think another hike is on the horizon. These analysts think the Fed will pause to evaluate the impact of the 500 bps increases they’ve already instituted. “[Fed Chairman Jerome Powell] expressed his bias in favor of remaining on hold in June … he’s going to stick with that as it gives them an additional month…

Inflation Climbed In March But Showed Signs Of Cooling

Inflation continued its upward march last month but showed signs of cooling, according to new data from the Bureau of Labor Statistics. The Consumer Price Index rose 5% YOY in March, down from 6% in February. Month-over-month, inflation was up 0.1% on a seasonally adjusted basis, compared to 0.4% in February. The core index, which measures everything but volatile food and fuel costs, ticked up by 0.1% to 5.6% YOY. Though the increase is slight, it’s the first YOY acceleration since September. “This is obviously a short-term setback for the Fed. However, inflation was never expected to decelerate in a straight line,” Tiffany Wilding, managing director and North American economist at PIMCO, wrote in a note. “[N]otwithstanding this report we…

Rate Hikes Up In The Air Thanks To New Economic Data

Mixed economic indicators released this week may stall the Federal Reserve’s plans for another round of aggressive rate hikes. Retail sales fell 0.4% in February as consumers strained under high inflation, Commerce Department data released Wednesday showed. Spending fell in eight of the thirteen groups analyzed, with furniture and department stores seeing the biggest dips. Bar and restaurants saw sales fall by 2.2%, the most in more than a year. But a surprise decline in producer prices provided a glimmer of hope that inflation may be cooling. Wholesale prices were down 0.1%, upending the Dow Jones prediction of a 0.3% increase. The index still increased YOY, but by less than expected. Both of these reports come just a day after…

Inflation Up 9.1% YOY, Largest Gain Since 1981

Inflation jumped by 9.1% YOY in June, more than analysts predicted and the largest gain since 1981, according to data released by the Labor Department today. The Consumer Price Index showed inflation rising 1.3% month-over-month, its largest jump since 2005. Predictions ahead of the data’s release forecast a 1.1% rise from May and an 8.8% increase YOY. This is the fourth consecutive month that analyst predictions fell short. Another month of skyrocketing inflation suggests that officials will be forced to continue aggressively raising interest rates.  But rate hikes have stoked fears of a recession. Strategists at Goldman Sachs recently upgraded their recession probability to 30% from 15%. “We now see recession risk as higher and more front-loaded,” Goldman Sachs Chief…