The Federal Reserve is expected to raise rates by another 25 basis points, even though many believe this is a poor decision. This could exacerbate existing issues in the banking sector and potentially lead to a recession. Despite a tight labor market and inflation increasing, there is evidence that these factors are shifting and that the Fed should be more cautious in its approach.
Moreover, the ADP employment report for April showed better-than-expected job creation, but the markets are looking past this due to the inconsistency in the report. Wages have also declined for those who switched jobs, and mortgage applications remain steady.
Additionally, homeowners are seeing increased home equity, providing an opportunity for debt consolidation.
The bond market seems to be holding up well and looking past some of the noise in the ADP report. The upcoming Fed decision, press conference, and BLS jobs report will be crucial in determining the direction of interest rates for the summer.
Overall, the beginning of May could signal the start of a better period for mortgage rates if the Fed takes a more cautious approach.
