A Recap
Former Democratic Senator Heidi Heitkamp expressed skepticism about the feasibility of President Joe Biden's proposed 44% capital gains tax. This proposal, included in the Fiscal Year 2025 Budget, aims to increase long-term capital gains and qualified dividends rates to 37% for high-income earners.
The Federal Reserve's preferred inflation measure, the Personal Consumption Expenditure (PCE) price index, rose unexpectedly in March. This development further diminished hopes for a Federal Reserve rate cut, which had already been fading in recent weeks. Market expectations now point to a 60% chance of a rate cut by September 2024, with only one cut anticipated by year-end.
The U.S. economy grew at a slower pace than expected in the first quarter of the year. The Gross Domestic Product (GDP) annualized growth rate for the quarter came in at 1.6%, according to the Bureau of Economic Analysis.
Despite recent inflation increases, Goldman Sachs economist Jessica Rindels has forecasted a decline in the core Personal Consumption Expenditure (PCE) Inflation for the remainder of the year. Rindels attributes the recent surge to temporary factors that are expected to subside.
As Treasury yields continue to climb, reaching levels not seen since November 2023, concerns are growing about the impact on the U.S. mortgage market and potentially the broader economy. The yield on the 30-year Treasury note rose 5 basis points, reaching 4.78% by mid-morning in New York, on track to close at its highest level since November 6, 2023.