Financial Report

The PCE Index release—the Federal Reserve’s preferred inflation indicator—has shown favorable results. However, the overwhelming sentiment remains one of uncertainty due to the ongoing trade wars. With these conflicts still in full swing, inflation is expected to rise in the near future at a faster-than-anticipated pace. Following the recent trade truce with China, consumer sentiment has improved, though the long-term impact remains uncertain. As expected, consumer spending has declined noticeably, as the tariffs have led to short-term price increases.

PCE Index
The cost of living barely rose in April — and the rate of inflation slowed even closer to prepandemic levels — but it’s unclear whether the recent progress can be sustained as the trade wars drag on. The back-to-back monthly inflation readings were the softest since the pandemic in 2020. The 12-month rate of inflation, meanwhile, slowed to 2.1% from 2.3% and also matched the lowest level since the pandemic.

Consumer Sentiment
A survey of consumer sentiment improved in late May on some signs that the tariff war with China might not be as damaging for the economy as feared. The second of two readings of the consumer sentiment survey rose to 52.2 from 50.8 in early May, the University of Michigan said Friday. That matches the sentiment level in April.

Consumer Spending
Americans became more cautious spenders in April after the Trump administration jacked up U.S. tariffs and the stock market plunged. Now the big question is what they will do next as the trade wars die down. Personal spending rose a modest 0.2% last month, the government said Friday, matching the forecast of economists polled by The Wall Street Journal.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.02% for this week, with the current rate at 6.03%
• 30-Yr FRM rates saw an increase of 0.03% for this week, with the current rate at 6.89%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.08% for this week. Current rates at 6.45%
• 30-Yr VA rates saw a decrease of -0.07% for this week. Current rates at 6.47%

Jobless Claims

Initial Claims were reported to be 240,000 compared to the expected claims of 230,000. The prior week landed at 223,000.

What’s Ahead

A strong release week is upcoming with expected manufacturing reports from ISM, S&P Global Manufacturing to denote where producers stand. Following that is the Beige Book and Non-farm Payrolls. This will help indicate the direction of inflation and response to the tariff policies.

Despite the recent pause on tariffs for Europe and progressing talks with China, the economic outlook remains largely negative across all sectors and markets. Although this week was relatively light on economic reports, the most notable was the Leading Economic Indicators, which showed a significant decline in every measurable category for April. This decline is largely attributed to the tariff policies implemented recently. Overall, the outlook remains pessimistic, despite other markets showing a more favorable reaction to the recent pauses on tariffs.

U.S. Leading Economic Indicators

The Conference Board Leading Economic Index (LEI) for the US fell sharply by 1.0% in April 2025 to 99.4 (2016=100), after declining by 0.8% in March (revised downward from the -0.7% originally reported). The LEI declined by 2.0% in the six-month period ending April 2025, the same rate of decline as over the previous six months (April–October 2024).

“The U.S. LEI registered its largest monthly decline since March 2023, when many feared the US was headed into recession, which did not ultimately materialize,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “Most components of the index deteriorated. Notably, consumers’ expectations have become continuously more pessimistic each month since January 2025, while the contribution of building permits and average working hours in manufacturing turned negative in April.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.09% for this week, with the current rate at 6.01%
• 30-Yr FRM rates saw an increase of 0.05% for this week, with the current rate at 6.86%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.18% for this week. Current rates at 6.53%
• 30-Yr VA rates saw an increase of 0.17% for this week. Current rates at 6.54%

Jobless Claims

Initial Claims were reported to be 227,000 compared to the expected claims of 230,000. The prior week landed at 229,000.

What’s Ahead

PCE Index data release, the Federal Reserve’s inflation indicator, the FOMC minutes giving us forward guidance for the Federal Reserve’s policy, and Univ. of Michigan Consumer Sentiment will be the most impactful releases of next week.

The latest inflation data has been released, offering insight into the near-term impact of the recent tariff measures. The results indicate that despite deflationary pressure on the economy, inflation continues to trend upward with the recent, ongoing tariff wars.

While the tariffs have been temporarily suspended, their effects are already being felt—consumers are experiencing price increases, and retailers have already been positioning themselves to increase prices due to the impacts of the tariff policies. While wholesale and producer inflation has seen a modest decline, this was expected as the market adjusts to the shifting economic landscape. Economists broadly predict that consumer prices will rise in the near term.

These findings reinforce what consumers have already been experiencing: sentiment has declined for the fifth consecutive month. Consumers are among the first to feel the direct effects of policy shifts.

Consumer Price Index

Consumer prices showed only a mild increase in April, but inflation probably won’t slow much further this year as the effects of the Trump trade wars ripple through the economy. The consumer-price index increased 0.2% last month, the Bureau of Labor Statistics said Tuesday, matching Wall Street expectations. Prices had posted a rare decline in March.

Price Producer Index

Wholesale prices posted the biggest drop in April, a -0.5% decline, since the pandemic in 2020, but economists say the decline in inflation appeared to be a one-off that might not be sustained if tariffs persist at current levels.

Consumer Sentiment

The University of Michigan’s popular gauge of U.S. consumer sentiment edged down to 50.8 in a preliminary May reading from 52.2 in the prior month. This is the index’s fifth straight monthly drop. Expectations for inflation spiked. Economists polled by the Wall Street Journal had expected sentiment would rise to 53.5.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.03% for this week, with the current rate at 5.92%
• 30-Yr FRM rates saw an increase of 0.05% for this week, with the current rate at 6.81%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.10% for this week. Current rates at 6.35%
• 30-Yr VA rates saw an increase of 0.12% for this week. Current rates at 6.37%

Jobless Claims

Initial Claims were reported to be 229,000 compared to the expected claims of 226,000. The prior week landed at 229,000.

What’s Ahead

A very light week with the Economic Leading Indicators, Job Data, and Manufacturing PMI dotting the landscape. The leading indicators are expecting a deflationary impact.