The economy and the market: weekly previews, recaps, monthly summaries, and major macro events as they land.
87 articles
The latest FOMC minutes show policymakers growing more concerned that inflation will stay above target for longer, even as the economy keeps expanding. With four dissents, the most since 1992, the Fed’s internal divide is widening and rate cuts look further away.
U.S. pending home sales rose more than expected in April, marking a third straight monthly gain and a positive year-over-year reading. But the rebound remains modest, with high mortgage rates, weak affordability, and uneven regional demand keeping the housing market on fragile footing.
The NAHB Housing Market Index rose to 37 in May, topping expectations and reversing part of April’s drop. But builder sentiment remains well below 50 as high mortgage rates, weak affordability, and heavy use of discounts and incentives keep the housing market stuck in a soft patch.
A wave of stronger-than-expected U.S. data — led by a scorching producer price report, firm retail sales and a jump in manufacturing — reinforced the case for sticky inflation and delayed rate-cut hopes. Markets responded with higher yields, a firmer dollar and renewed caution on stocks.
April industrial production and the May Empire State survey both beat expectations, signaling a stronger manufacturing rebound. But rising prices paid and received, along with longer delivery times, suggest inflation pressures are still building—complicating the Fed outlook and pushing Treasury yields higher.
U.S. households are still buying, but the latest data show inflation is taking a bigger bite out of spending power. Retail sales and credit growth remain firm, yet hotter CPI, sticky PCE, and weakening sentiment point to a consumer under strain and a Fed likely to stay higher for longer.
The Fed’s balance sheet rose to $6.728 trillion, a small weekly increase that suggests quantitative tightening is continuing but no longer in a straight line. Markets are watching the report for liquidity clues, not rate signals, as reserves remain ample and borrowing costs stay elevated.
The 30-year fixed mortgage rate slipped to 6.36%, but the tiny decline offers little relief for buyers. Higher inventory and lower new-home prices are helping at the margins, yet affordability remains tight and housing demand continues to look restrained.
U.S. retail sales rose 0.5% in April, matching forecasts and marking a third straight monthly gain. Core measures beat expectations, but higher gas prices and inflation clouded the real demand picture, reinforcing expectations that the Fed will stay on hold.
Weekly U.S. jobless claims climbed to 211,000, topping forecasts and hinting at a gradual cooling in labor conditions. Continuing claims also edged higher, showing laid-off workers are taking longer to find new jobs. Still, layoffs remain low, keeping recession fears and Fed policy expectations largely unchanged.
The MBA 30-year mortgage rate edged up to 6.46%, its highest level in five weeks, but home purchase demand still rose. Total applications increased 1.7% and purchase applications jumped 4%, showing buyers are pressing ahead even as affordability stays strained and refinance activity fades.
April’s producer price report came in far hotter than expected, with headline PPI up 6.0% year over year and core measures also surging. The broad rebound in services, trade margins, and freight costs is reviving concerns that inflation remains sticky and could delay Fed rate cuts.
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