The CPI and PPI came in on schedule, and the results were warmer than expected, with the Producer Price Index showing an increase of 0.6% — nearly double the expected 0.3% rise. This is also reflected in the elevated, though expected, CPI reading of 0.6%. This is certainly being driven by increased fuel and energy costs.
This is further supported by U.S. Retail Sales showing an increase, though high gas prices and inflation are playing a major role in the rise in sales figures. As a result, the rate cuts the Federal Reserve had discussed in the past are now looking very unlikely to happen.
Consumer Price Index
The U.S. inflation rate leaped to a nearly three-year high of 3.8% in April because of higher gas prices and the pain for consumers isn’t going away anytime soon. The spurt in inflation since the Iran war began 10 weeks ago could force the Federal Reserve to shelve an interest-rate cut this summer, especially since the job market has improved. The Fed cut a key interest rate three times last year to keep the unemployment rate from rising.
Producer Price Index
A recap of consumer prices in April showed inflation climbing to a three-year high. Now, the latest look at skyrocketing wholesale prices points to even higher inflation in the months ahead. The producer price index jumped 1.4% in April, the government said Wednesday, marking the biggest advance in more than four years.
Primary Mortgage Market Survey Index
- 15-Year FRM rates saw a decrease of -0.01%, bringing the current rate to 5.71%.
- 30-Year FRM rates saw a decrease of -0.01%, bringing the current rate to 6.36%.
MND Rate Index
- 30-Year FHA rates saw a 0.24% increase, with current rate at 6.17%.
- 30-Year VA rates saw a 0.24% increase, with current rate at 6.19%.
Jobless Claims
Initial Claims were reported to be 211,000 compared to the expected claims of 205,000. The previous week landed at 199,000.
What’s Ahead
A light week planned for next week, with only the Consumer Sentiment taking center stage.
The inflation data scheduled for this week has been pushed back by one week. The unemployment data was the only impactful economic report released this week. Across the board, unemployment statistics came in within expectations, while wage increases were slightly below expectations. Historically, wages have lagged behind inflation, making both unemployment and wage growth strong barometers of the economy’s overall health. Despite the current state of affairs, the economy appears to be holding strong, as reflected across the broader markets.
