Portland Mortgage Market Update — May 24, 2024

After a strong showing early in the week, rates worsened yesterday and today from some surprising showing in yesterday's durable goods report. "Durable goods" are a category of tangible products that last 3 years or longer (think of cars, appliances, and jewelry). A decline of -0.8% was expected in yesterday's report but the headline number showed it actually rose 0.7% in April. This headline number shocked the market and rates worsened as a result.

But not all was as it seemed, because the report also snuck in a revision to the previous month's number, adjusting the 2.6% reading from March down to just .08%. When factoring that in, it would look like yesterday's reading would show a decrease of -1.0%, which was worse than the markets expected -0.8% drop. Despite this, the damage had already been done before traders could dig into the data.

The Notes from the latest Fed meeting were also released this week, and the big news was that "various" fed officials indicated a willingness to hike rates again if inflation doesn't start cooling more. What is interesting is that Powell seemed to anticipate the media clamping on this because right after the Fed meeting (and in multiple appearances since then) he has reinforced that a hike will not be the next move- meaning he thinks the current rate is sufficiently restrictive and we just need more time for inflation or employment to come down.