This material includes forward-looking statements subject to risks and uncertainties; actual results may differ.
Fed Holds Rates, Signals More Hawkish Stance
The Federal Reserve left interest rates unchanged at 3.5%-3.75%, but its updated projections signaled a growing likelihood of a rate hike later this year, reflecting a more hawkish policy outlook. Chairman Kevin Warsh declined to submit an interest rate forecast of his own, while emphasizing his long-standing skepticism of forward guidance and announcing five task forces to review key areas of Fed policy and operations. Warsh repeatedly stressed the Fed’s commitment to restoring price stability, reinforcing a tougher stance on inflation that pushed Treasury yields higher and weighed on stocks. He also began overhauling Fed communications, replacing the traditional lengthy policy statement with a concise 130-word summary that investors viewed as the start of a broader institutional shift.
Housing Market Shows Signs of Resilience
Pending home sales rose 1.4% in April and were up 3.2% from a year ago, suggesting buyers remain active despite higher mortgage rates and economic uncertainty. Improved inventory, increased new listings, and more realistic seller pricing are helping support demand, while lower mortgage rates compared to last year have preserved some affordability. However, housing supply remains constrained, keeping home prices elevated and raising concerns that price growth could continue to outpace wage growth. Looking ahead, rising inflation and the potential for higher mortgage rates could challenge buyer confidence during the key summer homebuying season.
Hormuz Shipping Slows Despite Diplomatic Progress
Shipping traffic through the Strait of Hormuz slowed sharply over the weekend, raising concerns about global energy supplies, even though commercial vessels continued to transit the waterway and U.S. officials disputed Iran’s claims that it had closed the strait. Tanker traffic remains well below pre-conflict levels, with a growing share of vessels operating with tracking systems disabled, signaling continued caution among shipping operators. Meanwhile, U.S. and Iranian officials held constructive talks in Switzerland aimed at building on last week's memorandum of understanding, which includes reopening the strait and reducing regional hostilities. While diplomatic progress appears to be continuing, uncertainty surrounding Middle East tensions and global oil flows remains elevated, keeping energy markets on alert.
As always, Base Wealth Management remains focused on aligning investment strategies with your long-term goals amid evolving market conditions.
