• Despite the Federal Reserve’s decision to hold rates constant at their June meeting, current market
forecasts project an 81.8% chance that the FOMC will move forward with a 25-basis point hike in July,
according to the Chicago Mercantile Exchange’s Fed Watch Tool.
• In June, officials placed their year-plus hiking cycle on pause in an effort to evaluate the success of
their tightening effort thus far. Earlier in the month, national employment data registered stronger than
expected, while annualized inflation continued to trend downwards.
• With recession concerns still pertinent, the Fed opted to pause and digest incoming data. At the same
time, some officials have signaled a preference for further rate hikes to anchor longer-term inflation
expectations. Notwithstanding recent deceleration, Real PCE, the Fed’s preferred inflation gauge, remains
well above the central bank’s 2.0% target.
• In recent days, Fed Chair Jerome Powell indicated that “there’s more restriction coming,” acknowledging
that despite the committee’s decision to pause last month, he and other members “expect the moderate
pace of interest rate decisions to continue.” While not outright saying that they expect rate hikes to
continue, the statement signals the Fed won’t hesitate to move forward with a hike if the data warrants it.
• Home prices fell annually for the first time since April 2012, declining 1.7% year-over-year in April, according
to the S&P/Core Logic Case-Shiller Home Price Index.
• Market forecasts for the Case-Shiller projected a 2.6% annual decline during the month. Despite the
steepest annual drop in over a decade, monthly data suggest that home value declines may have hit
a cyclical nadir in recent months, as home prices were up 1.27% from March. Between June 2022 and
January 2023, home prices fell in each month before turning positive again in February.
• Seattle and San Francisco continue to experience deep year-over-year declines, while several other
markets, including Miami, Chicago, Atlanta, and Charlotte, are experiencing modest single-digit growth.
• The southeast continues to be the strongest region for home price growth, averaging 3.6% year-over-year. The west remains the weakest, falling -6.9% over the past 12 months.

Read the full report here.