It was a heavy week for economic data and most of it pointed in the same direction. Fed Governor Christopher Waller reinforced the Fed’s hawkish message early in the week, echoing Chairman Warsh’s warning that inflation risks have shifted from temporary to persistent. That concern was validated Wednesday when the Bureau of Economic Analysis reported that May PCE, the Fed’s preferred inflation gauge, rose 4.1% year-over-year. This is the highest reading since April 2023. Core PCE, which strips out food and energy, came in at 3.4%, slightly above forecast. The Iran conflict’s energy shock is the primary driver, though analysts continue to note that May may represent the peak of the surge, since oil prices have already fallen sharply in June as the Strait of Hormuz began reopening. That relief won’t show up in the data until next month, but the early signals show an improving environment.
New home sales for May told a similar story of pressure. Sales fell to a seasonally adjusted annual rate of 580,000 units — down 7.3% from April and were well below the 640,000 forecast — with 10.3 months of supply on hand, far above a balanced market. Only about one in seven new homes sold below $300,000, compared to one in five a year ago, underscoring how the affordable end of the market continues to shrink. On a more encouraging note, Congress passed the 21st Century ROAD to Housing Act with overwhelming bipartisan support this week, 358-32 in the House, 85-5 in the Senate. This is the largest housing legislation in decades. The bill focuses on the supply side: streamlining permitting, reforming zoning, funding vacant building conversions, and limiting large institutional purchases of single-family homes. The bill awaits the President’s signature; a planned signing ceremony was postponed this week, though it is expected to be signed or become law within the next ten days. Meaningful relief will take time, but it’s a step in the right direction.
The University of Michigan’s final June consumer sentiment reading came in at 49.5 in June’s final reading, revised up from the preliminary 48.9 and well above May’s all-time low of 44.8. The improvement was driven by easing gas prices (mostly in the last few weeks) though the reading remains historically depressed and consumers continue to cite inflation as their primary concern.
Looking Ahead
With PCE confirmed at a three-year high, the question heading into the Fed’s July 29–30 meeting is no longer whether the Fed will cut — it’s whether it will hike. Markets will be watching June CPI closely for signs that falling oil prices are beginning to cool down inflation before the Fed is forced to act. On housing, the passage of the ROAD Act is a positive development, but affordability won’t meaningfully improve until mortgage rates come down — and that requires a Fed pivot the current data doesn’t support.
Interesting to Note
The global role of the dollar is quietly being debated. Governor Waller hosted the Fed’s annual Conference on the International Roles of the U.S. Dollar this week. A topic with growing relevance in 2026. Between elevated inflation, the Iran conflict, and fiscal uncertainty, foreign central banks have been quietly reassessing their dollar holdings. The dollar retains its dominant reserve currency status, but the conversation around alternatives — the euro, China’s renminbi, and gold — is getting louder. A slow-moving story, but an important backdrop.
As always, please don’t hesitate to reach out with any questions. Wishing you a great week ahead.
Written by: Chris Wasson, CFP®
Sources:
Federal Reserve – Gov. Waller, June 22
BEA – Personal Income and Outlays, May 2026
U.S. Census Bureau – New Residential Sales, May 2026
NPR – Congress Passes Housing Affordability Bill
University of Michigan – Surveys of Consumers, June 2026
Disclosures
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. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor regarding your individual situation.
