Last week, as expected, May’s headline PCE Index was up 0.1% from the previous month and 2.6% over 12 months, not far from the Fed’s 2% target rate. There is still a nearly 60% probability of a 0.25% rate cut in September.
Sales of new single-family homes in May fell by 11.3%. The median sales price of new houses sold was $417,400, the lowest median price in the past 12 months and below the peak median price of $440,900 set in May 2023. May’s PCE Index and new home sales offer optimism for cooling inflation and a Fed soft landing.
Enjoy your Independence Day celebrations with friends and family this week. While some are sleeping off their celebrations from the night before, we will digest June’s Employment Situation Report. The unemployment rate should hold at 4%, near the Fed’s 4.2% longer-run projection, yet another reason to consider lower rates.
The included Market Week provides details of last week’s markets and economic events. You are welcome to contact us with any questions.
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Here’s to a great week ahead!
Thank you,
David Bennett