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The Federal Reserve’s preferred inflation measure eased in April.

There is some room for a rebound in mortgage rates in June after the PCE price index revised annual inflation to 2.65 percent in April and revised Q1 2024 GDP growth to 1.3 percent.

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There is some room for a rebound in mortgage rates in June after a key inflation metric moved in the right direction in April, reviving speculation in bond markets that the Fed will begin cutting rates as soon as September.

Personal Consumption Expenditure (PCE) Price Index, Federal Reserve Preferred gauge Inflation eased to 2.65 percent in April, according to the Commerce Department’s Bureau of Economic Analysis. Reported on Friday.

This is only a modest improvement from the 2.70 percent annual growth registered in March, but the PCE price index is once again moving closer to the Fed’s 2 percent inflation target. The index fell to 2.46 percent in January before going in the wrong direction in February and March.

PCE and core PCE trend down

Core PCE, which excludes food and energy costs and may be a more reliable indicator of underlying inflation trends, fell to 2.75 percent in April and has been falling steadily since January.

Ian Shepherdson

“Inflation numbers alone will not be low enough to trigger Fed easing until September – payroll growth will also have to slow markedly,” Pantheon Macroeconomics chief economist Ian Shepherdson said in a note to clients. ” “But this is also our primary concern, given the apparent weakness in the employment component of the main business survey.”

Tracked by Futures Markets. CME FedWatch Tool Friday showed investors were pricing in a 53 percent chance of at least one Fed rate cut by Sept. 18, up from 46 percent on April 30. percentage points, now see a very small chance (11 percent) that the Fed will cut rates by more than half a percentage point.

Pantheon Macroeconomics forecasters maintain that as the economy continues to cool, the Fed will cut its target for the short-term federal funds rate to 1.25 percentage points by the end of the year, and on the 10-year Treasury yield. Rates will fall. Up to 3.25 percent.

Mortgage rates and Treasury yields fell on Thursday after the Bureau of Economic Analysis Revised downwards Estimates for annualized first-quarter gross domestic product (GDP) growth rose from 1.6 percent to 1.3 percent, saying consumer spending rose less than previously estimated.

The yield on the 10-year Treasury, a useful Barometer for mortgage rates, fell 14 basis points this week to 4.5 percent, down from Wednesday’s high of 4.64 percent. A basis point is one-hundredth of a percentage point.

An index maintained by Mortgage news daily Rates on 30-year fixed-rate mortgages fell 5 basis points on Thursday and another 12 basis points on Friday.

Tracked by Lone Lock Data. Excellent blue A day behind but shows that after rising above the 7 percent mark on Wednesday, 30-year fixed-rate mortgage rates eased on Thursday and went back below 7 percent.

While still well below the 2024 high of 7.27 percent registered on April 25, the recovery in mortgage rates in the second half of May deterred some homebuyers.

According to a recent survey of lenders by the Mortgage Bankers Association (MBA), applications for purchase loans have declined for more than three weeks in a row.

Mortgage forecasts differ.

MBA and Fannie Mae forecasters disagree on where the next rate is, with MBA Economist May 16 forecast that mortgage rates are expected to remain below 6.5 percent by the end of this year and below 6 percent by the end of 2025.

Fannie Mae economists predict in a May 13 forecast That 30-year fixed-rate mortgage rates won’t drop below 7 percent until next year.

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