CPI & Fed Meeting Shake Up

Hope all the fathers out there had a fantastic Father’s Day weekend, enjoying some quality time with their kids!

This week, I have a new “value bomb” for our Realtors: 9 Strategies to Improve Credit Fast. It’s the perfect piece to share with clients who need a little boost to get their scores in line before the pre-approval stage.

Read time: ~3 minutes

Rates ended LOWER compared to last week, and volatility was HIGH. Rates are in the high-6/low-7 range for most loan types without paying discount points. Paying discount points can get you in the mid 6’s.

CPI & Fed Meeting Shake Up

Last Wednesday was a whirlwind. The day began at 8:30 AM with the release of May’s CPI data and concluded with Jerome Powell’s press conference about the Fed’s rate hike decision and future rate plans. The market was buzzing.

May's headline CPI inflation rate dipped to 3.3%, just under the forecasted 3.4%. Core inflation, which excludes food and energy, dropped to 3.4% compared to the expected 3.5%. This better-than-expected outcome made markets more optimistic about potential rate cuts in 2024, as it suggests inflation might be cooling faster than anticipated. Consequently, interest rates saw a notable improvement right away.

Futures markets began to factor in two rate cuts for 2024 following the CPI report, reducing the likelihood of no rate cuts from 33% to 24%.

However, it's important to highlight that while overall inflation has decreased to 3.3%, the costs of many essential items remain significantly higher:

1. Car Insurance Inflation: 20.3%

2. Transportation Inflation: 10.5%

3. Hospital Services Inflation: 7.2%

4. Car Repair Inflation: 7.2%

5. Electricity Inflation: 5.9%

6. Homeowner Inflation: 5.7%

7. Rent Inflation: 5.3%

8. Food Away From Home Inflation: 4.0%

Powell’s Fed Update Adds to Uncertainty 😬 

Just when we thought things were stabilizing in the mortgage market, Jerome Powell and the Federal Reserve dropped a significant update regarding their economic strategies, especially concerning rate cuts.

According to the most recent dot-plot chart, which is released quarterly, the Federal Reserve board members now foresee only one rate cut in 2024, a decrease from the three cuts predicted in March. However, expectations for 2025 have increased, with 3-4 rate cuts now anticipated, slightly up from the March report.

As mentioned in last week’s newsletter, several major countries are already cutting rates, which could pressure the US to consider similar moves, even if it doesn't perfectly align with their inflation-reduction goals.

In Wednesday afternoon’s press conference, Powell acknowledged that while inflation has decreased substantially, it’s still too high. He emphasized the Fed's 2% inflation target multiple times and pointed out the strong labor market with low unemployment. Powell also noted that if the economy remains strong and inflation continues, higher rates will need to be maintained for a longer duration.

Overall, despite the positive news from the morning’s CPI report, Powell’s comments in the afternoon dampened some of the gains in interest rates.

9 Quick Credit Boosting Tips 🏃‍♂️💨 

Did you know many Americans still lack understanding about credit? It’s surprising how little financial literacy is taught in schools. But don't worry, my team and I got you covered.

In today’s financial world, having a strong credit score is more important than ever. Over the past decade, my team and I have assisted countless homebuyers in rebuilding their credit, paving the way to homeownership and long-term financial stability.

Today, I am sharing 9 effective strategies to quickly and significantly boost your credit score. Share these tips with your clients to help them achieve their goals faster and smarter.

Two Ways My Team & I Can Help

1. Lets collaborate- Schedule a zoom meeting

2. Tough Deal? Let us know if we can help