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Market Analysis Week of 6-03-2024

Inflation Data

The latest major inflation data released last week was in line with the forecasts of economists, and Fed officials did not change their tune from the last meeting. As a result, mortgage rates ended last week with little change.
 

PCE Price Index

Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator. In April, core PCE, which excludes food and energy to reduce short-term volatility, was up 2.8% from a year ago. This was the same annual rate of increase as last month and the lowest level since March 2021. While far below its recent peak, it remains above the Fed’s target of 2.0%.
 

Rates Remain Steady

Recent comments from Fed officials have provided the consistent message that they are in no hurry to cut interest rates. They prefer to wait for “greater confidence” that inflation will continue on a path down to their target level. In a speech by Minneapolis Fed President Kashkari last week, he said he would like to see “many more months” of inflation data indicating that the downward trend is in place before “it’s appropriate to dial back” monetary policy tightening. Another official, Waller, listed his requirement as three to five months of positive data. Most investors now anticipate that the first rate cut will take place in September.
 

Refinancing Applications

After displaying strength earlier in the year, mortgage applications have stalled in the face of rising rates, falling to the lowest level since March. According to the latest data from the Mortgage Bankers Association (MBA), applications to refinance dropped 14% from last week but still were 12% higher than one year ago. Purchase applications fell 1% from the prior week and were down 10% from last year at this time.
 
 

Mortgage Rates for the week of 6-03-2024

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