☕️ This Week in the Economy: Inflation, Mortgages, and a Softening Dollar

Inflation: Not Gone, Not Spiking

The Consumer Price Index (CPI) clocked in at 321.5, with core CPI (excluding food and energy) slightly higher at 327.6. Meanwhile, the Fed’s favorite inflation metric — the Personal Consumption Expenditures (PCE) index — is holding steady at 126.56 (core PCE: 125.93).

All this puts the annual inflation rate at 2.7% as of June. That’s not runaway inflation, but it’s also not “mission accomplished.” It’s more like, “Please don’t cut rates too fast.”

Market-based expectations say inflation should drift lower from here:

• 1-year outlook: 2.79%
• 5-year: 2.37%
• 10-year: 2.33%
• 30-year: 2.44%

Translation: The market sees inflation normalizing, but not disappearing. The Fed is likely to stay cautious.

Rates & Yields: Still High, Still Sticky

The Federal Funds Rate remains at 4.33%, while Treasury yields are:

• 1-year: 3.92%
• 5-year: 3.77%
• 10-year: 4.22%

These rates drive everything from CD yields to mortgage costs to retirement projections. And while they’ve come down from 2023 highs, they’re still very much in “don’t get too comfortable” territory.

Mortgage Watch: Reversing Course Again

The 30-year fixed mortgage rate is at 6.63% right now. That’s lower than the 7.04% peak in January, but up from March’s mid-6% dip. Since early May, rates have stubbornly hovered between 6.75% and 6.9%, making this week’s drop worth watching — but not worth celebrating just yet.

If you’re waiting for 5% mortgages again… you might be waiting a while.

Dollar Weakens: What That Means for You

Here’s a headline that’s flying under most people’s radar: the U.S. dollar is weakening, and analysts expect that trend to continue — especially if the Fed starts cutting rates and other central banks don’t follow.

If you're investing globally, that matters. A weaker dollar can mean stronger foreign returns (in dollar terms), but it also hints at shifting dynamics in global capital flow. TL;DR: keep an eye on international exposure.

S&P 500: Still Feeling Pretty Good

The S&P 500 closed at 632.78, up 0.77% this week. Markets seem cautiously optimistic, pricing in a soft landing and slow-and-steady Fed. But with inflation not fully tamed and geopolitical tensions simmering in the background, don’t expect smooth sailing.

Big Picture: Proceed With Guarded Optimism

We’re in a phase of not terrible, but not great either. Inflation is sticky but slowing. Rates are high but not climbing. The dollar’s weakening, which has ripple effects. The market’s cautiously happy — for now.

If you’re investing, planning a big purchase, or just trying to figure out if this is a good time to move your cash: the name of the game this month is balance. Don’t panic, but don’t sleep either.

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