Over the weekend, the recent talks with China and the U.S. about the recent tariffs have been said to be making progress recently in Geneva, leading to restoring some stability across all sectors and markets. The prior week, the FOMC decided not to change the rates and that will likely be the case in the foreseeable future. While having less presence due to the current economic climate, this week’s CPI and PPI inflation data releases remain as important as ever. These reports will offer insight into the recent impact of the trade war and help inform expectations for the near-term economic outlook.

Trade Deficit

The U.S. international trade deficit, including goods and services, widened 14% in March to a record seasonally adjusted $140.5 billion, the Commerce Department said Tuesday, as companies rushed to import foreign products while they were slightly cheaper than they would be with White House tariffs added to the cost. Economists surveyed by The Wall Street Journal had predicted the deficit would widen to $136 billion from $122.7 billion in February.

FOMC Rate Decision

At its May 7, 2025, meeting, the Federal Open Market Committee (FOMC) unanimously decided to keep the federal funds rate unchanged at 4.25% to 4.5%, maintaining the rate at this level since December 2024. The Fed attributed this decision to increasing concerns about rising unemployment and inflation risks.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.03% for this week, with the current rate at 5.89%
• 30-Yr FRM rates saw no change for this week, with the current rate at 6.76%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.03% for this week. Current rates at 6.25%
• 30-Yr VA rates saw a decrease of -0.05% for this week. Current rates at 6.25%

Jobless Claims

Initial Claims were reported to be 228,000 compared to the expected claims of 230,000. The prior week landed at 241,000.

What’s Ahead

Consumer Price Index and the Producer Price Index are set to release next week, highlighting the biggest indicators of the impact of the recent tradewar on the average consumer.

Last week featured a slew of releases, but the most important one as of this writing is the GDP estimates. Both the GDP and GDP deflator data have started to reverse their previous trends, raising serious concerns that the economy may be experiencing deflationary effects.

This is somewhat offset by the Personal Income and Spending reports, which showed favorable numbers, as well as the Non-farm Payroll figures, which have also increased during this period.

The impact of the latest tariffs and trade wars has already appeared in estimates and data releases across numerous markets. There is strong expectation that the Federal Reserve will need to respond with support to ensure market stability, chiefly by reducing interest rates. Additionally, Consumer Confidence reports have shown a consistent downward trend for the fifth month in a row.

Consumer Sentiment

The consumer-confidence index sank in April to the lowest level since the depths of the COVID-19 pandemic, the Conference Board said Tuesday. Confidence fell 7.9 points to 86.0 in April, the fifth straight monthly decline.

Consumer Spending

Consumer spending rose briskly in March, but not because Americans are gung-ho on the economy. Many bought new cars or other items to avoid potential price increases tied to U.S. trade wars. Personal spending rose 0.7% last month, the government said Wednesday, a few ticks above the forecast of economists polled by The Wall Street Journal.

Gross Domestic Product

The U.S. economy contracted in the first quarter of 2025 for the first time in three years, reflecting a surge in imports ahead of President Donald Trump’s tariffs and a slowdown in consumer spending. Gross domestic product, the official report card on the economy, shrank at a 0.3% annual rate from January to March, the government said Wednesday. It’s the first contraction in GDP since early 2022.

Non-Farm Payrolls 

The U.S. added a stronger-than-expected 177,000 new jobs in April, suggesting the labor market was largely unscathed last month by the Trump trade wars, for the time being. The increase in jobs exceeded the 133,000 forecast of economists polled by the Wall Street Journal. Many economists had expected to see signs of damage from the trade wars in the report.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.02% for this week, with the current rate at 5.92%
• 30-Yr FRM rates saw a decrease of -0.05% for this week, with the current rate at 6.76%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.03% for this week. Current rates at 6.28%
• 30-Yr VA rates saw an increase of 0.03% for this week. Current rates at 6.30%

Jobless Claims

Initial Claims were reported to be 241,000 compared to the expected claims of 225,000. The prior week landed at 223,000.

What’s Ahead

Historically, it has been less relevant, but the Trade Balance reports will help shed light on some previously unknown data. Next week will also be lighter due to the upcoming FOMC rate decision, although a rate change is not expected.

While many useful indicators are set to be released this week, the previous week left us only with the Leading Economic Indicators, which showed signs of the economy slowing down in the future. Consumer Sentiment reports also indicated widespread dissatisfaction across all levels of income and education, largely due to the impacts of recent tariff decisions, which have been on hold.

We should expect next week to provide a clearer picture as decisions are made in the trade war between China and the United States. The PCE Prices, Non-farm Payrolls, Chicago Manufacturing PMI, Personal Income, and GDP estimates will offer more insight into the impact of the tariffs.

Concerns about inflation remain, but given the current stance on monetary policy, the Federal Reserve is much more likely not to react to inflation immediately, keeping its focus largely on the policies being set by the current administration.

Leading Economic Indicators

Leading Economic Index (LEI) for the US declined by 0.7% in March 2025 to 100.5, after a decline of 0.2% (revised up from -0.3%) in February. The LEI also fell by 1.2% in the six-month period ending in March 2025, smaller rate of decline than its -2.3% contraction over the previous six months.

Consumer Sentiment

Consumer sentiment plunged 8% in April from the prior month, to a final reading of 52.2, the University of Michigan said in its latest survey released Friday. That was a slightly smaller decline than a preliminary reading from earlier this month, which didn’t capture people’s reaction to Trump’s 90-day tariff delay announced on April 9.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.09% for this week, with the current rate at 5.94%
• 30-Yr FRM rates saw a decrease of -0.02% for this week, with the current rate at 6.81%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.11% for this week. Current rates at 6.25%
• 30-Yr VA rates saw a decrease of -0.11% for this week. Current rates at 6.27%

Jobless Claims

Initial Claims were reported to be 220,000 compared to the expected claims of 220,000. The prior week landed at 216,000.

What’s Ahead

PCE Prices, Non-farm Payrolls, Chicago Manufacturing PMI, Personal Income, and GDP estimates are set to release next week. With other releases in the Global US Manufacturing PMI which historically isn’t a significant indicator but with a major shift in the dynamics of world trade, we can see major changes in those data release.

While the week had a significant absence of impactful data releases, there are still the notable U.S. retail figures numbers, as the turbulent tariff policies that have been announced have sent shockwaves across many industries. This time the U.S. retail sales have seen a significant jump as consumers try to get ahead of the tariff policies, although it is suspected that the subsequent data will show a significant curtailing of purchasing power by consumers. This restraint in the future is what has most analysts concerned about the future in addition to inflation rising as a result of the tariff policies.

U.S. Retail Sales

The numbers: Retail sales in the U.S. surged 1.4% in March—the biggest increase in more than two years—as shoppers sought to buy big-ticket items such as cars before Trump administration tariffs could raise prices.

The rise in sales surpassed Wall Street expectations, but it doesn’t mean the U.S. economy is trouble-free. The trade wars threaten to boost prices, fuel inflation and slow the economy in the months ahead if they persist.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw an increase of 0.21% for this week, with the current rate at 6.03%
• 30-Yr FRM rates saw an increase of 0.21% for this week, with the current rate at 6.83%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.08% for this week. Current rates at 6.36%
• 30-Yr VA rates saw a decrease of -0.07% for this week. Current rates at 6.38%

Jobless Claims

Initial Claims were reported to be 215,000 compared to the expected claims of 225,000. The prior week landed at 224,000.

What’s Ahead

Watching where crude oil is headed in the coming weeks will also be important to see how international trade is handling the recent tariff policies. In addition, the Consumer Sentiment report will give a better indication of how safe consumers feel in the current climate, along with the Federal Reserve’s Beige Book.

Last week’s inflation reports, both the CPI and PPI, came in significantly cooler than expected. However, this must be viewed in the context of the administration’s recent tariff policies. Rather than signaling a healthy reduction in inflation, the data points to signs of deflation—which can be just as damaging to the economy as high inflation. While the FOMC Minutes offered little insight regarding interest rate changes, Federal Reserve Chairman Jerome Powell has made it clear that no action will be taken until more data becomes available. Finally, the latest consumer sentiment report dropped to its lowest level in three years, with inflation concerns reaching their highest point since 1981.

Consumer Price Index

Consumer prices fell in March for the first time since the outbreak of the coronavirus pandemic in 2020, but economists warn inflation could get worse if the U.S. retains higher tariffs on China and the rest of the world. The consumer-price index declined 0.1% last month, the Bureau of Labor Statistics said, aided by falling oil prices and lower airfares. It was the first drop since May 2020.

Producer Price Index

Cheaper oil has taken some pressure off on the inflation front, but it may only be temporary in the face of a major trade war between the U.S. and China. Wholesale prices in the U.S. fell 0.4% in March, dropping for the first time in 17 months, mimicking a similar report on consumer goods and services that showed retail-level inflation was muted last month.

Consumer Sentiment

The University of Michigan’s gauge of consumer sentiment fell to 50.8% in a preliminary April reading from 57.0% in the prior month.  It is the lowest level since June 2022. Sentiment has dropped for four straight months and is down 30% from December. Economists polled by the Wall Street Journal had expected an April reading of 54.6%.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw no change from last week, with the current rate at 5.82%
• 30-Yr FRM rates saw a decrease of -0.02% for this week, with the current rate at 6.62%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.47% for this week. Current rates at 6.50%
• 30-Yr VA rates saw an increase of 0.47% for this week. Current rates at 6.52%

Jobless Claims

Initial Claims were reported to be 223,000 compared to the expected claims of 223,000. The prior week landed at 219,000.

What’s Ahead

Very light release week with low impact data in the form of Federal Reserve’s beige book, Consumer Sentiment, and Leading U.S. Economic Indicators.

The previous week has seen tremendous impacts with the Trump administration’s recently revealed tariff policies, sparking widespread concern about their broad economic effects. These concerns have already led to rapid contractions in multiple markets.

Jerome Powell, Chairman of the Federal Reserve, has stated he is very uncertain about any moves made by the Federal Reserve and wants to wait for additional information before making decisions.

Uncertainty is at an all-time high, without much relief—even in light of positive data from previous months. Without any clear direction, there is growing speculation that inflation will only increase from here. Meanwhile, employment data has already shown a rapid increase in unemployment forecasts.

U.S. Employment Report

The U.S. added a bigger-than-expected 228,000 jobs in March. Good news to be sure, but that was before President Trump unveiled norm-shattering tariffs on the rest of the world, the repercussions of which are yet to be felt on the labor market. Economists polled by the Wall Street Journal had forecast an increase of 140,000 new jobs in March vs a revised 117,000 gain in February. The unemployment rate, meanwhile, moved up to 4.2% from 4.1%, matching the highest rate in five months.

ISM Manufacturing

According to the Institute for Supply Management (ISM), tariffs are driving up business costs and dampening economic activity. U.S. manufacturers appear to have slipped back into a slump, facing higher input prices and weaker demand due to President Donald Trump’s new metal tariffs and pending duties on other imported goods. ISM’s manufacturing index fell to 49% in March, down from 50.3% the previous month—any reading below 50% indicates a contraction in the sector.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.07% with the current rate at 5.82%
• 30-Yr FRM rates saw a decrease of -0.01% with the current rate at 6.64%

MND Rate Index

• 30-Yr FHA rates saw a decrease of -0.15% for this week. Current rates at 6.03%
• 30-Yr VA rates saw a decrease of -0.15% for this week. Current rates at 6.05%

Jobless Claims

Initial Claims were reported to be 219,000 compared to the expected claims of 228,000. The prior week landed at 225,000.

What’s Ahead

Following reports that the tariff news has disrupted market expectations, we should anticipate that both the CPI and PPI forecasts will come in higher than expected.