Prices keep rising
Case-Shiller’s national home price index rose 0.4% month-over-month in Feb 2024. That's up from +0.3% MoM in Jan 2024. Only one big city (Tampa) saw a MoM decline, and 14 out of 20 big cities showed an improvement in February versus January. Compared to last year, the national price index was up 6.4% YoY in Feb 2024, stronger than +6.0% YoY in Jan 2024. [Source: S&P Global]
What the Fed said
At its May 1 meeting, the FMOC (Federal Open Markets Committee) voted to keep short-term interest rates steady at 525-550 basis points (5.25%-5.50%). The last time the Fed raised rates was July 2023! Q: Why is the Fed not cutting rates? A: Chairman Jerome Powell cited the recent lack of progress on inflation, and the continuing strength of the labor market and economy. [Source: Federal Reserve]
How things have changed
At the beginning of 2024, the market was expecting multiple Fed rate cuts starting as early as May. Today, the market is pricing in only one rate cut...in November! For multiple rate cuts to be back on the agenda, it would likely require either a significant increase in the unemployment rate (>4%) OR a convincing move in "core" PCE (<2.5%). [Source: CME, Mortgage News Daily]
