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🔍 Inflation Eases as Mortgage Rates Steady
Despite a swirl of economic headlines, mortgage rates have remained relatively stable over the past three weeks—ending this week slightly lower. Markets were influenced by trade-related news, but the latest inflation report landed right on target, helping to keep volatility in check.
🌐 Tariff Talk Returns, but Markets Stay Grounded
The short holiday week was packed with trade developments:
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On Friday, President Trump proposed raising tariffs on the European Union to 50% starting June 1.
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By Tuesday morning, that increase was postponed until July 9.
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On Wednesday, a federal trade court ruled that the President cannot impose tariffs under the Emergency Economic Powers Act, adding legal complexity to the trade outlook. The administration now has 10 days to adjust its approach.
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On Friday, Trump also accused China of breaking the preliminary trade truce reached on May 12, which had paused most tariffs for 90 days.
Despite these headlines, the overall market response was muted, as investors wait for more definitive policy direction.
💡 Inflation: Cooling but Not Cold
The Fed’s preferred inflation gauge, Core PCE, rose 2.5% year-over-year in April, a notable drop from 2.7% in March—marking the lowest annual increase since March 2021. While this shows encouraging progress, the Fed’s 2.0% inflation target remains elusive. A major wildcard? Whether new tariffs will reverse this cooling trend.
📈 Consumer Confidence Jumps Back
After five straight monthly declines, consumer confidence rebounded sharply in May. The Conference Board’s index surged to 98, far exceeding expectations of 86.
Driving the jump:
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Reduced fears of a full-blown trade war
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Improved outlooks on jobs
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Renewed optimism in the stock market
🏡 What This Means for Buyers & Sellers
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Buyers: With mortgage rates holding steady and inflation easing, now may be a good window to lock in a favorable rate before any potential rate hikes tied to future trade disruptions.
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Sellers: Consumer confidence is rising again—especially around employment and investment markets—so buyer activity could pick up as we head into summer.
