What’s Happening?
All news below is color-coded as “good“, “bad“, or “neutral” for mortgage rates.
May was relatively quiet for economic news. Rates pushed a little higher but seem to be following the latest trend rather than any single event making rates worse.
•Tariffs suspended, but the suspension was suspended (neutral for rates): On Wednesday, May 28th, a Federal Court ruled that Trump’s “liberation day” tariff plan was illegal. However, a federal appeals court paused the suspension. This means very little for mortgage rates and real estate until we see how all this plays out. Until then, I’ll monitor the tariff events with a gentle pulse as they unfold.
•Stock markets improving (neutral for rates): Thankfully, it seems like markets have grown numb to tariff headlines. The S&P 500 is up 5% for the month and, although it has not yet returned to its February 2025 highs, it remains slightly positive year-to-date.
•Federal Reserve leaves Fed Funds Rate unchanged (neutral for rates): The Fed is in a holding pattern and it seems they won’t make any changes to their rate until prompted by some effect from the labor market, unemployment, or tariffs. The next Fed rate cut is expected to be on Sept 17th with a 90% probability.
•Jobs Report (slightly bad for rates): The April BLS Labor Report signaled a stronger-than-expected labor market.
- New jobs came in much higher than expected at 177k new jobs; 138k were expected. Strong jobs data adds upward pressure to rates.
- The latest job gains for February and March were revised down by a combined 58,000 which signals a weaker than previously reported labor market and puts downward pressure on rates.
- Unemployment year-over-year was unchanged from 4.2%.
- Wages are up 0.2% in April and are up 3.8% year-over-year.
•Inflation Report (slightly good for rates): The March CPI (Consumer Price Index) report came in at 2.4% year-over-year, compared to 2.8% in last month’s report, which is favorable and would typically push rates down in a normal week.
