Thursday’s release of the Fed’s preferred inflation gauge gave markets plenty to think about. The PCE price index rose 3.8% year-over-year in April—the highest level in three years—driven largely by energy costs tied to the ongoing conflict with Iran. Core PCE, which strips out food and energy, came in at 3.3%, in line with expectations but still well above the Fed’s 2% target. Monthly readings were a bit softer, offering a small sign that the surge may be leveling off. Markets expect the Fed to hold rates steady for most of 2026, with some traders even pricing in the possibility of a rate hike early next year if inflation stays sticky.
Consumer confidence edged down in May, with the Conference Board’s index slipping to 93.1 from 93.8 in April. Consumers are feeling the pinch at the pump and the grocery store, and references to the Middle East conflict appeared more frequently in survey responses for the second straight month. The expectations component—how people feel about the next six months—actually rose to its highest level of the year, though it remains below the threshold historically associated with recession risk. Also, out this week, the government’s second estimate of first-quarter GDP came in at 1.6% annualized growth, revised down from the initial 2.0% reading, with weaker inventory figures accounting for most of the difference.
The housing market is giving back some of its spring momentum. Pending home sales had surged to their strongest level since late 2022 earlier this month but slipped last week as mortgage rates climbed back to around 6.75% – a ten-month high tied to uncertainty around the Iran conflict. Currently, the 30-year fixed rate sits near 6.6%. Inventory is improving, and existing home prices hit a record median of $417,700 in April, but affordability remains a challenge for many buyers until rates move meaningfully lower.
Looking Ahead
- Jobs report: May employment data is due Friday, June 5th—a key input for the Fed as it weighs inflation against labor market conditions.
- Fed watch: The next FOMC meeting is June 7–8, the first under new Fed Chair Kevin Warsh. All eyes will be on how he sets the tone on rates.
- Iran ceasefire: Negotiators reached a tentative 60-day deal to extend the ceasefire and reopen the Strait of Hormuz—but it still needs President Trump’s formal approval. Markets are watching closely, as a confirmed deal could meaningfully ease energy prices and inflation in the months ahead.
- Mosaic move: closer to home, our team is gearing up for our office move next week. We can’t wait to show everyone our new space!
Interesting to Note
Researchers using artificial intelligence were able to read previously illegible text from a charred scroll buried by the eruption of Mount Vesuvius in 79 AD. The scroll, part of a collection discovered in Herculaneum, had been unreadable for nearly two thousand years. The AI was able to detect faint ink patterns beneath the damaged surface and piece together a passage about music and pleasure. It is a remarkable reminder that some of history’s most fascinating stories are still out there—just waiting for the right tools to uncover them.
As always, please reach out with any questions. Have a great weekend!
Written by: Chris Wasson, CFP®
Sources:
Consumer Confidence (Conference Board)
Pending & Existing Home Sales (NAR)
Iran Ceasefire & Oil Prices (CNBC)
Herculaneum Scrolls & AI (National Geographic)
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS. This material is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.
