The latest Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred measure of inflation, has been released. The report indicates that inflation remains elevated across most sectors, although the overall reading came in slightly below expectations.

However, this encouraging development has been tempered by a decline in consumer sentiment, which has fallen for the fourth consecutive month. Much of the pessimism has been attributed to concerns surrounding the conflict in Iran and rising fuel costs.

Despite inflation coming in below forecasts, some members of the Federal Reserve have continued to discuss the possibility of raising interest rates further in an effort to keep inflation under control.

PCE Index
The core personal consumption expenditures price index showed a 3.4% annual rate after rising 0.3% for the month. The core annual reading was the highest since October 2023. The Fed’s primary inflation gauge also showed an annual rate of 4.1%, the highest since April 2023.

Consumer Sentinment
Consumer sentiment has tumbled to a fresh record low in May as fears of higher prices grow due to the U.S.-Iran war and elevated oil prices, the University of Michigan’s Surveys of Consumers said Friday.

Primary Mortgage Market Survey Index

• 15-Year FRM rates saw an increase of 0.03%, bringing the current rate to 5.84%.
• 30-Year FRM rates saw an increase of 0.02%, bringing the current rate to 6.49%.

MND Rate Index

• 30-Year FHA rates saw a decrease of -0.08%, with current rate at 6.07%.
• 30-Year VA rates saw a decrease of -0.08%, with current rate at 6.09%.

Jobless Claims
Initial Claims were reported to be 215,000 compared to the expected claims of 223,000. The previous week landed at 227,000.

What’s Ahead
Key releases to watch next week include the U.S. Employment Report, U.S. wage data, and the Consumer Confidence report.