Drama, drama, drama in our update for this week. The markets have been reeling since Friday’s higher than expected consumer inflation report came out. Unless you’ve been living under a rock – which may be a good idea…no inflation under there – you’ve likely seen the headlines splashed all over the media that the CPI report on consumer inflation reported inflation readings higher than we’ve seen in 41 years. Year over year inflation for us consumers has risen to 8.6 percent with fuel up 107 percent since last year. If you’ve been to the pump, you know!
Where you will also see this rise in prices is in your variable rate consumer debt – like credit cards, personal loans, etc. – any loan where the rate is tied to the CPI. So, if you want to get out of this kind of debt, a great way to do it is by accessing the equity in your home and paying off all that high-interest debt. I can help you shore up your finances and put you in a safer financial position, especially as we continue to hear and see rumblings of a recession coming. Reply to this email or call/send me a text at 818.307.6072 and let’s talk about your options.
What’s moving markets this week…
On the heels of the inflation news, we’ve got a Fed Meeting this week and lots of other important data that I’m breaking down for you here. First, the two-day Fed Meeting that starts Tuesday. Predictions are that the Fed will raise its Fed Funds Rate by .50 percent, thereby making money more expensive for banks to borrow as well. And, as you might imagine, that can trickle down to us at the consumer and mortgage levels.
We also get a look at wholesale price inflation, which is often a leading indicator of what’s coming at the consumer level. Producer prices are expected to rise 0.8 percent for the month of May after moderating to a 0.5 percent rise in April. Year-over-year rates are expected to remain horribly steady at 11.0 versus 11.0 percent in April.
The report on Retail Sales numbers comes out as well. Sales, being driven increasingly by rising prices, came in above expectations in April, rising 0.9 percent overall. May’s expectations are mixed: only a 0.1 percent gain overall, and a 0.5 percent decline when also excluding gasoline.
As for housing market news, we get a look at the sentiment of the nation’s homebuilders. Rising mortgage rates are driving down sentiment among home builders. The housing market index has missed the consensus of each report so far this year and especially so in May, falling 8 points to 69. June’s consensus is 68.
The final housing market report of the week is the report on Housing Starts and Permits, a leading indicator of housing supply and sales to come. Housing starts and permits are expected to slow to respective annual rates of 1.695 million and 1.780 million in May from April’s respective rates of 1.724 and 1.819 million.
I’ll be keeping an eye on rates and what happens with the Fed Meeting, so stay tuned!