Hope everyone had a good week—here’s a quick look at what moved the markets and what to keep an eye on heading into next week.
Inflation was the big story this week, with the Consumer Price Index showing prices rose 4.2% from a year ago in May, while core inflation came in at 2.9%. Investors also kept a close eye on the conflict with Iran, which added uncertainty to the markets and pushed energy prices higher. Mortgage rates saw plenty of volatility as investors reacted to both the inflation data and geopolitical headlines. The 10-year Treasury yield jumped after President Trump threatened additional military action against Iran, then moved back lower after those planned strikes were called off and tensions appeared to ease. When the dust settled, mortgage rates ended the week slightly lower than where they ended last week.
For the markets, attention will likely stay focused on developments in the Middle East early in the week, as Monday and Tuesday’s economic reports are not expected to have much impact. The biggest day will be Wednesday, when a key consumer spending report is released and the Federal Reserve wraps up its meeting, including updated economic forecasts and clues about future rate policy. After that, the economic calendar is fairly quiet for the rest of the week.
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Happy June and welcome to this week's market update!
Mortgage rates moved a tad higher this week as oil prices increased and economic reports showed the labor market remains stronger than expected. Employers added more jobs than forecast, job openings rose, and both the manufacturing and services sectors continued to grow. While wage growth cooled, the overall strength of the economy could make the Federal Reserve less likely to cut interest rates anytime soon, putting upward pressure on mortgage rates.
Looking ahead, investors will continue to watch developments in the Middle East and listen for clues from Federal Reserve officials about future interest rate decisions. Key reports this week include Existing Home Sales on Tuesday and two important inflation reports—CPI on Wednesday and PPI on Thursday—which could influence the direction of mortgage rates.
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News about possible progress in ending the conflict in the Middle East was the biggest factor affecting mortgage markets this week, helping mortgage rates move a little lower. Inflation is still staying higher than the Fed would like, which continues to put pressure on rates. At the same time, many Americans are saving less as everyday costs stay high, and consumer confidence dipped again as people remain worried about prices, jobs, and the economy.
Next week brings several important economic reports, including the closely watched ISM manufacturing report on Monday and the jobs report on Friday, both of which could impact mortgage rates. A few other economic updates will come out during the week as well. News from the Middle East could also affect markets, especially with President Trump expected to make a decision on the Iran peace plan.
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This past week, economic news mostly pointed to inflation staying stubborn, which kept pressure on mortgage interest rates. Investors paid close attention to inflation data and comments from the Fed, with growing concerns that cuts to borrowing costs may take longer than hoped. As a result, mortgage rates moved a little higher and remained unpredictable
Next week brings a few important economic reports to watch. Since the markets are closed Monday, things kick off Tuesday with the May Consumer Confidence report. Thursday will be the biggest day, with key inflation data coming out, including the Fed’s preferred inflation report.
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Higher oil prices pushed inflation up this week, which negatively affected rates. Inflation increased more than expected, mainly because of higher gas and energy costs, making everyday expenses like travel and housing more expensive. At the same time, wages are not rising fast enough to keep up with inflation. Consumer spending is still growing, but people are being more selective—higher-income households continue spending, while many lower-income families are cutting back and focusing on essentials.
Looking ahead, investors will continue watching the conflict in the Middle East and paying close attention to comments from Fed officials about future interest rate decisions. Some economists are warning that inflation could climb as high as 6% if energy prices keep rising, which would likely put more upward pressure on interest rates. The Fed’s meeting notes from April 29 will be released Wednesday and may give more clues about what’s ahead. It will be a lighter week for economic reports, with Housing Starts data coming out Thursday.
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