The week’s data reports have been relatively uneventful, with the focus squarely on the upcoming Federal Reserve rate decision scheduled for the following week. Among the noteworthy reports, New Home Sales have captured attention by significantly surpassing year-end projections as we transition into January. This surge can be attributed to the recent series of week-to-week rate cuts observed over the past two weeks, hinting at a market response.
PCE Index and Q1 GDP Projections: Federal Reserve’s Rate Hold in the Spotlight
The PCE Index and preliminary Q1 GDP projections take center stage as the second-largest data reports of the week. Expectations lean towards the Federal Reserve maintaining the current interest rate, but there is a glimmer of optimism regarding the possibility of a slight rate cut.
Pending Home Sales Surge
In December, U.S. pending home sales surged, thanks to falling mortgage rates that enticed buyers back into the market. The National Association of REALTORS® reported an 8.3% increase in pending home sales from the previous month.
GDP Growth: Resilient U.S. Economy
Despite high interest rates and persistent inflation, the U.S. exhibited robust economic growth in the fourth quarter, clocking in at a 3.3% annual pace. This figure surpassed the forecasted growth rate of 2.0% and marked one of the strongest growth periods since 2014, when excluding the sharp post-pandemic recovery.
PCE Index: Inflation Remains in Check
The U.S. inflation rate, as measured by the Federal Reserve’s preferred PCE gauge, edged up by a modest 0.2% in December. This indicates a trend towards smaller price increases in 2024. Year-end inflation remained stable at 2.6%, offering little evidence of imminent economic trouble.
Mortgage Rates Update
- 15-Year Fixed-Rate Mortgages (FRM) have seen a 0.20% increase, currently standing at 5.96%.
- 30-Year FRM rates have risen by 0.09%, with the current rate at 6.69%.
MND Rate Index: Mortgage Rate Trends
- 30-Year FHA rates have increased by 0.05% for the week, with current rates at 6.20%.
- 30-Year VA rates have risen by 0.08% this week, reaching 6.25%.
Jobless Claims Report
Initial jobless claims for the week were reported at 214,000, exceeding the expected 200,000 claims. The prior week had recorded 189,000 claims.
Looking Ahead: Federal Reserve Rate Decision in Focus
All eyes are now fixed on the imminent Federal Reserve rate decision, slated for the upcoming week. This pivotal event will be accompanied by other significant reports, including Non-farm Payroll statistics, Consumer Reports (University of Michigan), PMI numbers, and the Shiller Price Home Index’s first reports of the year.
