Hopin’ for a Powse… a Powell pause. Traders expect the Fed will take a break from rate hikes at its meeting on Wednesday, pricing in a 70%+ chance of no bump this month (as of Friday). But the Powse may be short-lived: traders are betting on a 50% chance of a July hike, and no longer expect any rate cuts this year (the labor market = still stubbornly strong). Last week, Canada’s central bank unexpectedly resumed its rate-hiking campaign, raising worries in the US. Tomorrow’s May inflation report may influence hike expectations.
BYOH (build your own home)… Lennar, one of America’s largest homebuilders, has benefited as existing inventory stays woefully low. Rising rates have made homeowners (who snagged “golden-handcuff” low rates mid-pandemic) less likely to move, boosting demand for new homes. Sales of new US homes rose in April, and last month builder confidence popped. When Lennar last reported, profits were up 18% on the year. But high mortgage could cool home building demand. We'll get a fresher look when Lennar reports Wednesday.