Financial Report

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.

The PCE Index release—the Federal Reserve’s preferred inflation indicator—has shown favorable results. However, the overwhelming sentiment remains one of uncertainty due to the ongoing trade wars. With these conflicts still in full swing, inflation is expected to rise in the near future at a faster-than-anticipated pace. Following the recent trade truce with China, consumer sentiment has improved, though the long-term impact remains uncertain. As expected, consumer spending has declined noticeably, as the tariffs have led to short-term price increases.

PCE Index
The cost of living barely rose in April — and the rate of inflation slowed even closer to prepandemic levels — but it’s unclear whether the recent progress can be sustained as the trade wars drag on. The back-to-back monthly inflation readings were the softest since the pandemic in 2020. The 12-month rate of inflation, meanwhile, slowed to 2.1% from 2.3% and also matched the lowest level since the pandemic.

Consumer Sentiment
A survey of consumer sentiment improved in late May on some signs that the tariff war with China might not be as damaging for the economy as feared. The second of two readings of the consumer sentiment survey rose to 52.2 from 50.8 in early May, the University of Michigan said Friday. That matches the sentiment level in April.

Consumer Spending
Americans became more cautious spenders in April after the Trump administration jacked up U.S. tariffs and the stock market plunged. Now the big question is what they will do next as the trade wars die down. Personal spending rose a modest 0.2% last month, the government said Friday, matching the forecast of economists polled by The Wall Street Journal.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.02% for this week, with the current rate at 6.03%
• 30-Yr FRM rates saw an increase of 0.03% for this week, with the current rate at 6.89%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.08% for this week. Current rates at 6.45%
• 30-Yr VA rates saw a decrease of -0.07% for this week. Current rates at 6.47%

Jobless Claims

Initial Claims were reported to be 240,000 compared to the expected claims of 230,000. The prior week landed at 223,000.

What’s Ahead

A strong release week is upcoming with expected manufacturing reports from ISM, S&P Global Manufacturing to denote where producers stand. Following that is the Beige Book and Non-farm Payrolls. This will help indicate the direction of inflation and response to the tariff policies.

Despite the recent pause on tariffs for Europe and progressing talks with China, the economic outlook remains largely negative across all sectors and markets. Although this week was relatively light on economic reports, the most notable was the Leading Economic Indicators, which showed a significant decline in every measurable category for April. This decline is largely attributed to the tariff policies implemented recently. Overall, the outlook remains pessimistic, despite other markets showing a more favorable reaction to the recent pauses on tariffs.

U.S. Leading Economic Indicators

The Conference Board Leading Economic Index (LEI) for the US fell sharply by 1.0% in April 2025 to 99.4 (2016=100), after declining by 0.8% in March (revised downward from the -0.7% originally reported). The LEI declined by 2.0% in the six-month period ending April 2025, the same rate of decline as over the previous six months (April–October 2024).

“The U.S. LEI registered its largest monthly decline since March 2023, when many feared the US was headed into recession, which did not ultimately materialize,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “Most components of the index deteriorated. Notably, consumers’ expectations have become continuously more pessimistic each month since January 2025, while the contribution of building permits and average working hours in manufacturing turned negative in April.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.09% for this week, with the current rate at 6.01%
• 30-Yr FRM rates saw an increase of 0.05% for this week, with the current rate at 6.86%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.18% for this week. Current rates at 6.53%
• 30-Yr VA rates saw an increase of 0.17% for this week. Current rates at 6.54%

Jobless Claims

Initial Claims were reported to be 227,000 compared to the expected claims of 230,000. The prior week landed at 229,000.

What’s Ahead

PCE Index data release, the Federal Reserve’s inflation indicator, the FOMC minutes giving us forward guidance for the Federal Reserve’s policy, and Univ. of Michigan Consumer Sentiment will be the most impactful releases of next week.