Weekly Update 4/24/2026: Earnings Season Rolls on as US Iran Negotiations Remain in Limbo
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Domestic Economic News
US mortgage applications for home purchases increased last week by the most since early January as financing costs continued to ease, a tentative sign that the housing market is grinding forward. The Mortgage Bankers Association’s index of home-purchase applications rose 10.1% in the week ended April 17, data from the group showed Wednesday. The contract rate on a 30-year mortgage dropped for a third week to 6.35%, the lowest since mid-March. Rates on five-year adjustable mortgages tumbled 15 basis points, the most since January, to 5.48%. Cheaper home-financing costs also helped drive up MBA’s refinancing index by nearly 6%. The yield on the 10-year Treasury note, which offers a guide to the direction of home-financing costs, has been drifting lower as investors anticipate the US and Iran are closer to ending hostilities. The war has essentially halted shipments of oil and other products through the Strait of Hormuz. In late March, the 10-year note had advanced to the highest level since July on fears higher energy costs would spark faster inflation. Other data have pointed to firmer underlying demand for US homes. On Tuesday, a report from the National Association of Realtors showed contract signings for purchases of previously owned homes rose 1.5% in March to a four-month high, helped by a pickup in listings. The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
Applications for US unemployment benefits rose last week, though they remain at a level consistent with low layoffs. Initial claims increased by 6,000 to 214,000 in the week ended April 18, according to Labor Department data released Thursday. The median forecast in a Bloomberg survey of economists called for 210,000. That period coincides with the reference period for the government’s April employment report. Continuing claims, a proxy for the number of people receiving benefits, rose to 1.82 million in the previous week. Initial filings continue to hover around some of the lowest levels seen in the last year, aligning with other recent data that suggests the labor market is stabilizing. While roughly one in two employed Americans is concerned about losing their job, according to a Harris Poll conducted for Bloomberg News in late March, the claims data have yet to reflect a meaningful pickup in layoffs.
US business activity picked up in April, fueled by the strongest manufacturing growth in nearly four years as war-related supply disruptions prompted a scramble for supplies. The S&P Global flash composite index rose 1.7 points to a three-month high of 52, data released Thursday showed. Figures above 50 indicate expansion. A measure of prices charged by manufacturers and service providers accelerated to the highest level since mid-2022. Output at manufacturers grew sharply as new orders expanded by the most since May 2022. The upturn in demand lifted optimism about the outlook to a more than one-year high. At the same time, some of the pickup in bookings reflected business concerns about supply shortages and price hikes due to the conflict in the Middle East. “An expansion of output and orders could be partly traced to the building of safety stocks, with survey respondents reporting ‘panic' and ‘emergency' buying ahead of price hikes and supply shortages in echoes of the problems seen during the pandemic,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement. The Iran war also led to greater supply constraints for factories, with lead times on supplier deliveries stretching to the longest since August 2022 and materials costs accelerating. The measure of input prices for manufacturers grew at the fastest rate in nearly a year. Businesses are quickly passing those costs along, as the composite measure of selling prices increased to 59.9, the highest since July 2022. “Not surprisingly, prices are already spiking higher in this environment, and not just for energy but for a wide variety of goods and services. The overall inflation picture is now the most worrying for almost four years,” said Williamson. Meanwhile, service sector activity recovered from last month's contraction, though remains subdued. A measure of new business slid to a two-year low.
Interest Rate Insight and the Fed
President Donald Trump’s nominee to chair the Federal Reserve said Tuesday that he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so. “The president never once asked me to commit to any particular interest rate decision, period,” Kevin Warsh, a former top Fed official, said under questioning by the Senate Banking Committee. “Nor would I ever agree to do so if he had. ... I will be an independent actor if confirmed as chair of the Federal Reserve.” Warsh’s comments came just hours after Trump, in an interview on CNBC, was asked if he would be disappointed if Warsh didn’t immediately cut rates and responded, “I would.” The comments underscore the challenge faced by Warsh, 56, a financier and former member of the Fed's board of governors whom Trump named in January to replace the current Fed chair, Jerome Powell. Democrats on the committee accused Warsh of flip-flopping on interest rates over the years, supporting higher interest rates under Democratic presidents and advocating rate cuts during Trump's time in office. Investors are watching the hearing closely to see how Warsh balances Trump’s demands with worsening inflation, as the war in Iran pushes up the price of gasoline. Higher inflation typically leads the Fed to raise rates, or at least keep them unchanged, rather than cut them. When the Fed changes its key rate, it can affect mortgages, auto loans, and business borrowing. Yet Warsh's account was challenged by Sen. Ruben Gallego, an Arizona Democrat, who said that Wall Street Journal reporting last year found that Trump had urged Warsh to reduce borrowing costs. For all the back and forth, the hearing didn't appear to advance Warsh's nomination, which has been delayed by a Justice Department investigation into the Fed and Powell, over brief testimony Powell gave last June before the same panel about a building renovation. Sen. Thom Tillis, a North Carolina Republican on the committee, reiterated Tuesday he wouldn't vote for Warsh until the investigation is dropped. With the committee closely divided and all Democrats opposed to his nomination, Tillis' opposition is enough to bottle it up in committee. “We have got to get rid of this investigation,” Tillis said, “so I can support your nomination.” Tillis has previously said that all seven Republicans on the committee have signed a letter stating that Powell did not commit a crime when he testified before the panel last June. Federal prosecutors, led by Assistant U.S. Attorney Jeannine Pirro, are investigating his testimony for potential perjury, though a judge said last month they offered no evidence to support the charge when he threw out subpoenas Pirro had issued. Prosecutors from her office as recently as last week sought access to the Fed’s building project but were turned away, revealing that the Trump administration has not reversed course despite opposition from members of his own party that are essential to Warsh’s confirmation.
In his opening remarks, Warsh told the Senate Banking Committee that one of his top goals would be to fight inflation, which remains elevated at 3.3% annually. “Congress tasked the Fed with the mission to ensure price stability, without excuse or equivocation, argument or anguish,” Warsh said. “Inflation is a choice, and the Fed must take responsibility for it.” Warsh would be in a tough spot if confirmed. Inflation is worsening, making it much harder for the Fed to implement the interest rate cuts Trump so desperately seeks. The conflict could also slow the economy, as well as hiring. And if Warsh ultimately becomes chair, he may very well find his predecessor, Powell, still sitting on the Fed’s governing board, an uncomfortable arrangement that hasn’t occurred since the late 1940s. Warsh said the Fed's political independence is “essential,” and that the central bank wasn't threatened when “elected officials — presidents, senators, or members of the House — state their views on interest rates." Trump has repeatedly urged Powell to cut the Fed's key rate from its current level of about 3.6% to as low as 1%, a view almost no economist shares.
Impactful International News
UK inflation accelerated in March, as a surge in energy costs triggered by the Iran war started to hit consumers in the pocket. The consumer prices index rose 3.3% from a year earlier, up from 3% the previous month, the Office for National Statistics said Wednesday. The figure was in line with the expectation of economists. The pickup was driven by an 8.7% jump in the price of motor fuel, the largest monthly gain since 2022 when Russia invaded Ukraine. Services inflation, a key indicator of underlying price pressures, unexpectedly accelerated to 4.5% from 4.3% due to volatile airfares. The report shows how the Middle East crisis has upended the outlook for inflation, with Brent crude close to $100 a barrel as the US and Iran fail to reach an agreement to end a 53-day war that has brought Persian Gulf oil and gas exports to a near standstill. “This is not our war, but it is pushing up bills for families and businesses,” Chancellor of the Exchequer Rachel Reeves said in a statement responding to the inflation report. The squeeze is also threatening to ripple out beyond the petrol pump into other everyday goods and services, with domestic gas and electricity prices set to rise in July and warnings that food inflation could reach close to double digits. Inflation had been on track to fall to the 2% target in the second quarter, clearing the way for further interest-rate cuts from the Bank of England. Now, however, it’s expected to stay at around 3% and accelerate in the third quarter, raising the possibility of rate increases instead. The pound was little changed following the data at $1.3520 and bets on BOE rate hikes eased, with investors fully pricing in one quarter-point rate increase and a 50-50 chance of a second. While policymakers are expected to keep borrowing costs on hold on April 30 as they seek more clarity on the conflict, they’ve signaled they are ready to act if needed to stop the energy price shock from spilling over into second-round effects.
Company Events
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