With no clear signs of inflation, markets are now betting that the Fed will not raise policy rates in June. Concerns about a sluggish economy support lower rates. Following a slowdown last month, jobless claims rose last week to the highest number in more than a year. Concerns about the health of the labor market can also help to support lower rates. Balancing the pressures on rates, oil prices have hit new 2016 highs. Higher cost for oil is good for stocks and typically the opposite for bonds.
Low mortgage rates have contributed to an improvement in housing affordability for the first quarter of 2016, despite an increase in prices. Home prices climbed in 87% of the U.S. metropolitan areas in the first quarter. The increases are caused by buyers competing for a tight supply of listings. Home buyers are finding more outdoor features as they hunt for homes. Improvements in lighting, privacy, and amenities like fire pits are now common.
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