Market Recap - March 29, 2024

Interest rates flatlined this week, which is always welcome! Wall Street must be feeling comfortable with the economic data.

Personal Consumption Expenditure (PCE) - the Fed's favorite indicator of inflation - came out today while the markets were closed. While we did not make much progress on lowering the inflation rate, at least it was slightly better than expected.

The CORE PCE - what the Fed watches closely as it strips out the volatile food and energy prices - came in at 2.8%, which met expectations. The Fed's target is 2%, but there isn't likely to be anything that will allow us to make a quick drop to that level anytime soon.

The next Fed meeting to discuss the Fed Funds rate is May 1st. It is almost certain the Fed will hold the Fed Funds rate steady. It would be surprising if they make a cut at the June meeting as well. It appears it will be a very slow decline in rates from here.

One thing that could change that is the job market. We get job numbers next week. If the Fed sees cracks in the job market, that could spur them to make a cut sooner.

The economy continues to show resiliency. Consumer spending is still driving the economy. However, it is clear the consumer is spending more than they are making, with credit debt continuing to grow to all time highs. It appears many consumers are living on credit. How long will this last? At some point, consumers are going to have to start paying their credit cards, which will slow down the economy.

Some good news for the real estate market: Despite the high interest rates in February (over 7%), pending home sales still increased 1.6%. There is still more demand from homebuyers than homes available for sale.

The unaffordability of homes is frustrating for homebuyers. Unfortunately, the data doesn't indicate that this will change soon. Those that can qualify - while outside of their budget or comfort zone - may have to sacrifice now to get a home at a lower value and reduce their mortgage payment down the road through a refinance.

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Bill Gaylord, NMLS 680603 | Gaylord-Hansen Team at CrossCountry Mortgage | 858-776-6830

Rate Source: Mortgage News Daily (https://www.mortgagenewsdaily.com)

The information contained is the viewpoint of the presenter(s). Individuals should consult their own financial representative.

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