Inman Connect Las Vegas: Where Industry Insights Meet Opportunity
Inman Connect Las Vegas, July 30-Aug. 1, 2024, is the premier event where real estate professionals come together to discuss the latest trends, challenges, and opportunities in the industry. Join us for three days of insightful discussions, networking, and educational sessions that will help you stay ahead of the curve.
Inflation Cools Down: What It Means for Mortgage Rates
Recent inflation data has sent yields on the 10-year Treasury note tumbling, signaling a potential pathway for the Federal Reserve to lower interest rates. According to the Consumer Price Index (CPI), inflation has cooled down, with the price of shelter making up about a third of the weight of inflation. The data showed the price of rent rose by 0.3 percent, the lowest rate of increase since August 2021.
Rental Housing Economist Weighs In
Jay Parsons, a real estate economist, has been noting for over a year that falling rents would plummet national inflation. "It’s finally happening," he wrote. The data has confirmed that rent growth peaked in February 2022 and fell for 18 months before leveling out at just over 3 percent annual growth.
Core CPI and PCE Index
Core CPI, which excludes volatile food and energy prices, was up 3.3 percent in June from a year ago, an improvement from 3.4 percent annual growth in May. The Federal Reserve’s preferred gauge of inflation, the personal consumption expenditures (PCE) price index, fell to 2.6 percent in May from a year ago.
Wider ’30-10 Spread’ Keeps Mortgage Rates Elevated
The "30-10 spread" between mortgage rates and the yield on the 10-year Treasury note remains wider than expected, keeping mortgage rates elevated. Before the pandemic, mortgage rates were running about 2 percentage points higher than the yield on the 10-year Treasury note. However, the 30-10 spread has gradually narrowed to 2.6 percentage points, but it remains "significantly higher now than it should be."
Fed Chair Jerome Powell Testifies
Fed Chair Jerome Powell testified before House and Senate lawmakers this week, stating that policymakers want to see more evidence that inflation is moving sustainably toward the Fed’s target of 2 percent before cutting rates. Powell also mentioned that the economy has made considerable progress toward the Federal Reserve’s 2 percent inflation goal and labor market conditions have cooled while remaining strong.
Initial Jobless Claims Drop
Initial jobless claims dropped last week to 222,000, down from 239,000 the week before. The Department of Labor reported that seasonally adjusted initial claims dropped by 17,000, indicating a strong labor market.
CME FedWatch Tool Predicts Rate Cut
The CME FedWatch Tool, which tracks futures markets to predict future Fed moves, put the odds of a September rate cut at 94 percent after the release of the latest CPI data. Futures markets are now pricing in a 49 percent chance that the Fed will cut rates by at least 75 basis points by the end of the year.
Conclusion
Inman Connect Las Vegas is the perfect platform to stay ahead of the curve and network with industry professionals. Join us for three days of insightful discussions, educational sessions, and networking opportunities. Take advantage of the latest industry trends and opportunities to grow your business.
FAQs
Q: What is the Consumer Price Index (CPI)?
A: The CPI is a measure of the average change in prices of a basket of goods and services over a specific period of time.
Q: What is the Federal Reserve’s preferred gauge of inflation?
A: The Federal Reserve’s preferred gauge of inflation is the personal consumption expenditures (PCE) price index.
Q: What is the "30-10 spread"?
A: The "30-10 spread" is the difference between the yield on the 30-year Treasury bond and the yield on the 10-year Treasury bond.
Q: What does the CME FedWatch Tool predict?
A: The CME FedWatch Tool predicts the likelihood of a rate cut by the Federal Reserve based on market data and trends.
Q: Why is the "30-10 spread" important?
A: The "30-10 spread" is important because it determines the difference between mortgage rates and the yield on the 10-year Treasury note, which in turn affects the overall direction of interest rates.
Q: What is the significance of initial jobless claims dropping?
A: A drop in initial jobless claims indicates a strong labor market, which can lead to a slower pace of inflation and potentially a rate cut by the Federal Reserve.
By rewriting the content in a clear and concise manner, we have made it easy for teens to read and understand. The conclusion and FAQs sections provide additional clarity and context to the main points of the article.
Author: www.inman.com
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