John's Finance Corner: Inflation Rates Drop, A Glimpse of Encouraging Trends
March brought some welcome news in the world of inflation data, as key indicators showed notable declines, signaling potential relief for consumers and businesses alike. The headline Consumer Price Index (CPI) dropped from 2.8% to 2.4% year-over-year, largely driven by falling energy and gas prices. Meanwhile, Core CPI—which excludes volatile food and energy prices—also improved, decreasing from 3.1% to 2.8%. This marked the lowest Core CPI reading since March 2021, a promising sign of cooling inflationary pressures.
The Wholesale side echoed similar trends. The Producer Price Index (PPI) declined from 3.2% to 2.7% in March, again largely attributable to lower gas prices. Core PPI, which removes food and energy from the equation, experienced a dip from 3.5% to 3.3%. Importantly, a significant portion of PPI data is utilized in the Federal Reserve's preferred measure of inflation, Personal Consumption Expenditures (PCE). As such, there’s anticipation that the upcoming PCE report, due April 30th, will reflect similar positive trends.
However, despite these promising inflation readings, market reactions have been relatively subdued. Ongoing uncertainties surrounding trade wars and tariff policies seem to have tempered the enthusiasm that would typically accompany such favorable reports. Ordinarily, these developments could result in lower bond yields and mortgage rates—a welcome outcome for borrowers. Nevertheless, the encouraging inflation data serves as a positive foundation amid broader market volatility.
The immediate outlook for market-moving data remains calm, with fewer major reports expected this week. Additionally, the bond market faces a shortened week due to the Easter holiday, closing early on Thursday and remaining closed on Friday. Market attention continues to revolve around trade negotiations and tariff developments, which have stirred volatility in recent weeks.
While bond yields and mortgage rates have seen increases recently, it's important to maintain perspective. Rates were higher earlier this year in January and February, reminding us that recent fluctuations, though unsettling, are not unprecedented. Over the coming months, we may witness further improvements in bond yields and mortgage rates—provided global trade negotiations and tariff agreements find resolution.
The time to act is now. Let’s capitalize on this moment of opportunity by staying informed and proactive about these developments. Whether you're looking to secure a favorable mortgage rate, optimize investments, or simply understand the evolving market, keeping a close eye on inflation trends and global trade agreements will be key. Take steps today to position yourself for potential gains in the months ahead.
John Lamberg
MORTGAGE LOAN ORIGINATOR
NMLS 189233
