Inflation Hit a 3-Year High. Rates Just Fell Anyway. May PCE came in at 4.1% — the highest inflation reading in three years — while Core PCE hit 3.4%, both above April. The Fed's 2% target feels distant, but here's the twist: mortgage rates actually dropped to their lowest since May 14th on the same day, because traders had braced for an even hotter number and bought bonds when it didn't materialize. Affordability is tight but technically intact — a typical payment sits at ~24% of median family income, just inside the historical 25–28% safe zone. Oil has fallen from $115 to $75 since the Iran deal, which should ease inflation pressure in the months ahead, and the ROAD to Housing Act is still sitting on Trump's desk with the constitutional clock running. The honest forecast: rates stay volatile in an elevated range — but the 75,000 buyers who signed contracts in May anyway are the ones who won't regret their timing.

Kevin Warsh chairs his first FOMC meeting today through Wednesday. No rate move expected — this is a projection meeting, so the dot plot and Warsh's press conference tone are the real story. Hawks want to remove the easing bias; markets are pricing ~80% odds of at least one hike by year-end following strong May payrolls and 4.2% inflation. Meanwhile, sellers are losing pricing power in a growing number of regions — Texas and Florida are now buyer's markets, while the Northeast and Midwest remain seller-favoring. Three watches for Wednesday: (1) does the statement drop easing bias language, (2) where do the dots land vs. prior projections, (3) Warsh's press conference tone and 10-year Treasury yield reaction. Have a great Monday! -John

Look for free content in the comments! Happy Friday! The May jobs report delivered a stunning surprise this morning: 172,000 nonfarm payrolls added versus the 85,000 consensus forecast, more than doubling expectations — and prior months were revised upward by a combined 93,000 jobs, meaning the labor market is dramatically stronger than anyone believed even last week. Unemployment held steady at 4.3%, and job growth was broad-based across leisure, government, health care, and manufacturing. The catch: a strong labor market gives the Fed less reason to cut rates, so Treasury yields jumped on the news and mortgage rates face near-term upward pressure — classic "good news is bad news" for rate watchers. Freddie Mac's weekly survey (released before today's surprise) showed nationally reported rates in the mid-6% range, with chief economist Sam Khater noting income growth is now outpacing home price growth — a meaningful affordability tailwind. The biggest wildcard remains the U.S.-Iran peace deal, where Polymarket odds sit above 80% for a deal by June 30 — if it closes, falling oil prices ease inflation, yields drop, and the strong labor market becomes rocket fuel for a housing recovery.

NAR just dropped the May existing home sales report — and it's the strongest housing data we've seen all spring.Sales rose 3.2% both month-over-month and year-over-year, hitting a 4.17 million annual pace — the highest since December. The median May price hit a record $429,300, up 1.3% from last year. First-time buyers made up 35% of all sales — the highest share since June 2020 — and homes sold in just 29 days on average with 2.3 offers. The data is better than the headlines, and your clients need to hear it from you first. Thanks! -John

Free social media content in the comments. Have a great day! 👇😎 This week's CPI report tells two very different stories depending on which number you read. The headline — 4.2% annual inflation, the highest since April 2023 — sounds alarming, but it's almost entirely an energy story: gas is up 40.5% year-over-year and accounted for over 60% of May's increase. Strip that out, and core CPI rose just 0.2% (below estimates), with shelter costs decelerating and core goods actually falling. Markets reacted fast — odds of a Fed rate hike by year-end jumped from 14.4% to 66.6% in a month — but Fed Governor Bowman is already warning against hiking in response to what looks like a war-driven, transitory spike. Meanwhile gas prices have already dropped ~$0.30/gallon from their peak, though that relief still hinges on the Iran situation. Bottom line: despite the scary headline, pending sales (75,935), purchase apps (+7% YoY), and May existing home sales (highest since December) all show buyers moving anyway. The Fed meets Monday — Warsh's first meeting, dot plot drops Wednesday.