Critical Fed Meeting This Week Before August Break

This should be an interesting week in markets as we have an important Fed Meeting coming up, adjourning mid-week, among a slew of high-impact economic and housing reports. 

Yes, we’re hearing much drama in the media about housing and whether bubbles are bursting or not. Although none of us knows the future, what I do know is that a cooling of the housing market is offering greater opportunities for buyers and we’re even seeing more financing options coming out to help buyers afford homes, even in this market. So, if you felt intimidated by the housing market for the past couple of years, now might be the time to wade back in. 

I can help you! Reach out, call, text, reply to this email and let’s look at your options!

As for what I’m watching this week…

There is much speculation as to what the Fed will do this week regarding its Fed Funds Rate. Many analysts are saying that they have to send a message to markets that they have inflation under control before they go on their August break. This could mean an increase in the Fed Funds Rate of .75 percent. As for what exactly will happen and how markets will react, we’ll have to wait and see

On Tuesday we get a look at the latest home price appreciation rates with the Case-Shiller Home Price Index. Estimates for May are a respective monthly gain of 1.6 percent and a yearly rate of 21.0 percent unadjusted. Still hot, I’d say; however compared to last month, appreciation is relatively steady.

Also coming in on Tuesday we see the numbers for New Home Sales. As a further sign of cooling, sales of new homes are expected to fall noticeably to an annualized rate of 664,000 in June versus 696,000 in May.

We’ll get a look at Pending Home Sales numbers – a leading indicator for overall home sales – on Wednesday. After six straight sharp declines, pending sales were up 0.7 percent in May. However, a further gain is not expected for June where the consensus is a decline of 1.0 percent.

Thursday’s first look at Q2 GDP (gross domestic product) is highly anticipated. It is expected to show acceleration to 0.5 percent annualized growth versus first-quarter contraction of 1.6 percent. One of the most common definitions of recession is 2 consecutive quarters of negative GDP, so if estimates are correct and GDP is on the plus side, there will be less evidence of imminent recession in the short term.

We end the week with Friday’s critical inflation report, the PCE Index, considered the Fed’s most preferred measure of inflation. Inflation readings are expected to accelerate with monthly gains of 0.9 overall and for annual rates of 6.7 overall, still hotter than last month’s 0.6 and 6.3 percent, respectively.

I’ll be keeping an eye on all of it and reporting back next week.