Financial Report

With the passing of the FOMC rate decision, it has become clear that the Federal Reserve is taking a wait-and-see approach to the current situation regarding tariff policies. Although the vast majority of economists around the world have made predictions about what lies ahead, the effects have not yet been pronounced. Many of the recent tariff changes have also been revoked or put on pause for the largest industries, leaving many markets uncertain about the future. The key takeaway is that conditions will likely remain steady for now. The only other data release offering insight into what’s to come is the notable decline in U.S. retail sales, reflecting a reduction in consumer activity.

U.S. Retail Sales
Simmering trade wars have created a sort of start-and-stop economy, and the latest snapshot of retail sales in May underscores the threat to U.S. growth. Sales at retailers nationwide fell for the second month in a row, the government reported Tuesday. Receipts tumbled 0.9% in May after a small decline in April, based on seasonally adjusted numbers.

FOMC Rate Decision
The Federal Reserve on Wednesday stuck to its forecast of two interest-rate cuts in 2025 despite seeing a burst of inflation coming in the next few months as a result of higher tariffs. In an updated forecast, Fed officials now expect inflation, as measured by the core personal-consumption expenditures (PCE) index, to jump to 3.1% by the end of the year, up from a rate of 2.5% in April.

Primary Mortgage Market Survey Index
• 15-Yr FRM rates saw a decrease of -0.01% for this week, with the current rates at 5.96%
• 30-Yr FRM rates saw a decrease of of -0.03% for this week, with the current rates at 6.81%

MND Rate Index
• 30-Yr FHA rates saw a decrease of -0.04% for this week, with the current rates at 6.41%
• 30-Yr VA rates saw a decrease of -0.05% for this week, with the current rates at 6.42%

Jobless Claims
Initial Claims were reported to be 245,000 compared to the expected claims of 246,000. The prior week landed at 250,000.

What’s Ahead
Job data is due ahead next week as well as the more recent data from the U.S. trade deficits, which many have had their eyes on.

The CPI and PPI have yet to reveal the impacts of the tariff policies that were placed temporarily, which gives some potential insight that there might be a path forward for the Federal Reserve to look at potential rate cuts. However, economists across many industries are expecting inflation to increase temporarily as an impact for the policies that were put in place.

Significant uncertainty remains across many import and export markets, with major players opting to err on the side of caution while awaiting a final decision from the administration regarding its policies. Consumer sentiment has shown a slight improvement for the first time in six months, offsetting the largely negative outlook that has dominated the market since the onset of the trade wars.

Consumer Price Index
Top Federal Reserve officials and Wall Street economists still think higher U.S. tariffs will cause prices to increase over the summer, however. The evidence was thin in May. The consumer-price index rose a mere 0.1% last month, the Bureau of Labor Statistics said Wednesday. That was a tick below Wall Street’s forecast. The 12-month increase in consumer prices edged up to 2.4% from a four-year low of 2.3%.

Producer Price Index
Americans have yet to feel any sting of inflation from the Trump tariffs when they go shopping. Now, a new look at wholesale prices suggests the coast might be clear for at least a little while longer. The producer-price index rose a scant 0.1% in May, the government said Thursday, coming in below the Wall Street forecast.

Consumer Sentiment
The University of Michigan’s closely watched gauge of U.S. consumer sentiment rose to 60.5 in a preliminary June reading from 52.2 in the prior month. This was the first improvement in six months. The gain was larger than forecast. Economists polled by the Wall Street Journal had expected sentiment to rise to 54 from the month-earlier reading of 52.2.

Primary Mortgage Market Survey Index
o 15-Yr FRM rates saw a decrease of -0.02% for this week, with the current rate at 5.97%
o 30-Yr FRM rates saw a decrease of -0.01% for this week, with the current rate at 6.84%

MND Rate Index
o 30-Yr FHA rates saw a decrease of -0.02% for this week. Current rates at 6.45%
o 30-Yr VA rates saw a decrease of -0.03% for this week. Current rates at 6.47%

Jobless Claims
Initial Claims were reported to be 248,000 compared to the expected claims of 246,000. The prior week landed at 248,000.

What’s Ahead
The next FOMC Rate Decision is up ahead next week. Nothing is expected from this rate decision, as the Federal Reserve has stated repeatedly they have no plans to change things until policies are settled. Leading indicators have also been a significant player in the latest releases with many things being very uncertain.

With next week bringing the latest wave of inflation data reports–namely the CPI and PPI–this week featured a slew of releases with minimal impact. The Trade Deficit and the Federal Reserve’s Beige Book stood out as the main indicators reflecting the current state of the economy. Although tariffs have largely been put on pause, their effects continue to reverberate across numerous industries.

Significant concern remains due to the instability in decision-making from the current administration. The Trade Deficit came in as expected, with the deficit cut in half following the announcement of tariffs, which caused imports to plunge. Meanwhile, the Beige Book indicated a significant slowing of the economy.

Federal Reserve Beige Book
The U.S. economy slowed to a crawl in May, with consumers pulling back on spending and businesses delaying hiring, according to the Federal Reserve’s Beige Book survey released Wednesday. According to the report, nine of the 12 Fed districts reported contraction in economic activity or no change in growth. The remaining districts saw slight growth.

Trade Deficit
The numbers: The U.S. international trade deficit narrowed 55.5% in April to $61.6 billion, the Commerce Department said Thursday. Economists surveyed by the Wall Street Journal had predicted the deficit would narrow to a seasonally adjusted $63.3 billion from a record $140.9 billion in March.

Primary Mortgage Market Survey Index
o 15-Yr FRM rates saw a decrease of -0.04% for this week, with the current rate at 5.99%
o 30-Yr FRM rates saw a decrease of -0.04% for this week, with the current rate at 6.85%

MND Rate Index
o 30-Yr FHA rates saw an increase of 0.02% for this week. Current rates at 6.47%
o 30-Yr VA rates saw an increase of 0.03% for this week. Current rates at 6.50%

Jobless Claims
Initial Claims were reported to be 247,000 compared to the expected claims of 236,000. The prior week landed at 239,000.

What’s Ahead
The Consumer Price Index (CPI) and Producer Price Index (PPI) inflation reports are the major releases scheduled for next week, with most expectations pointing toward a rise in inflation in the near future. These will be followed by the Consumer Sentiment report.