Good Tuesday AM from your Hometown Lender,

The CPI inflation data was the headliner this am.

It came in as expected so didn’t hurt but it didn’t help, either. Pricing has slowly but steadily deteriorated from the best levels we saw at the end of June, but this seems to be more technical as we trade up and down the same trading channel and are not breaking out in either direction for the moment. I do see so many permutations where rates are going to improve, it is just a different timeline for each of them.

The good thing to recognize is that the Fed is not going to raise rates again in this cycle and with that, our downside risk (higher rates), is limited. The pendulum in my opinion has moved to our side and now it is just when. Do I see the Fed cutting in July? Likely not unless Chairman Powell buckles under the ever-increasing pressure from the White House, the FHFA director, The Treasury Secretary, and now the Inspector General over the 2.5 billion Chairman Powell authorized for his office remodel. A July cut is not looking promising yet, but 1) a lot can change in Washington in 2 weeks and 2) a September cut is still on the table   

Talking about the CPI report…

The headline popped 0.3% in June, its hottest monthly move since January, nudging the annual rate up to 2.7% The core gauge was a milder 0.2% rise, keeping the 12-month core pace at 2.9%. What kept a lid on it? Car prices (new and used) drove lower, airfare and hotel tabs eased, and housing costs stayed remarkably chill at 0.2%. But tariffs are starting to show up, as the Fed expected: furniture, electronics, and even toys all logged their biggest jumps in a year-plus.

• Overseas buyers invested $56 billion in residential property in the 12 months ending in March, jumping 33.2% year over year, according to a report Monday from the National Association of Realtors (NAR).
• A cautionary tale, only 4% of homeowners nationwide have flood insurance, according to the Federal Emergency Management Agency.

Stay safe and make today great!