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| | How higher-for-longer will impact housing — The hotter-than-expected inflation reading last week — driven largely by an increase in shelter costs — has turned attention to the housing market, where the higher-for-longer interest rate environment will take a particular toll, just when the sector was due for a rebound. “It's going to hurt the housing market’s recovery, but it's hard to imagine the housing market getting much worse, because it's already been through so much,” said Daryl Fairweather, chief economist at Redfin. “We were hoping that interest rates would fall in time for the spring housing market season, but it's already April 15, and interest rates are higher than they were a month or just a week ago,” Fairweather added. “So I think that the housing market revitalization or recovery is going to be delayed maybe until next year even, because of the timing of the housing market.” Most people plan their moves in the spring, so families can be in place by the time the new school year rolls around. Waiting out this spring because of higher rates — the interest rate for a 30-year fixed mortgage rose to 6.9 percent last week, according to Freddie Mac — may mean staying on the sidelines until a year from now, Fairweather said. Now the question is when the Fed will cut interest rates. “The Fed is likely to delay the rate-cut decision” previously expected in June, according to Lawrence Yun, chief economist at the National Association of Realtors. “If it’s just one month, maybe it’s no big deal, but as we approach autumn it’s going to be very difficult, with the presidential election in November, for the Fed to do something in September or October. So we’re really looking at July” as a make-or-break month for a rate cut. Otherwise, “affordability will continue to be a challenge throughout this year,” Yun added. “High inflation means not only are people angry about higher prices but it’s really bad news for first-time homebuyers” who don’t have existing home equity to help offset the cost. The timing matters beyond what it means for the spring homebuying season. More than half of homeowners and renters said in a Redfin poll published last month that housing affordability would impact how they planned to vote in November. There’s also a kind of Catch-22 at work, with higher interest rates contributing to higher shelter costs, which in turn push inflation higher, setting the stage for higher rates. Shelter costs rose 5.7 percent in March from a year earlier, according to the Bureau of Labor Statistics, accounting for more than 60 percent of core inflation over that period. “If we want to bring overall inflation down, one way to do that is to decrease the rate of shelter inflation, and the only way to do that is to build more sustainable and affordable housing,” said Robert Dietz, chief economist at the National Association of Home Builders. But “the expectations for the Fed reducing fewer times raises some of the short-term rates that help determine the cost of development and construction…which will make the supply challenge that much worse,” Dietz said. It all comes at a precarious moment for the real estate industry, which will have to adapt to new rules about agent commissions going into effect this summer as a result of a recent National Association of Realtors settlement. “I think those changes combined with high interest rates are adding more uncertainty to the housing market, and could further dampen sales,” Fairweather said. “Just that uncertainty is enough to make people not buy.” It’s Tuesday — Send tips to zwarmbrodt@politico.com.
| | | | A message from ASTA: AAdvantage MEMBER? YOUR MILES MAY BE AT RISK. Starting May 1, American Airlines will deny AAdvantage miles and loyalty points for bookings made through most travel agencies to favor their “preferred” channels. If you book with a travel advisor, your points and miles could be lost. This is especially harmful to business, government, rural, and elderly travelers who depend on the services and savings that agencies provide. Congress – Don’t let American Airlines eliminate consumer choice. | | | | | The IMF holds press briefings on its World Economic Outlook and Global Financial Stability Report … Fed Vice Chair Philip Jefferson discusses monetary policy during uncertainty at the International Research Forum on Monetary Policy at 9 a.m. … Treasury Secretary Janet Yellen holds a press conference with remarks on her key priorities for the World Bank and IMF Spring Meetings at 10 a.m. … U.S. Trade Representative Katherine Tai testifies at House Ways and Means at 10 a.m. ... WTO director-general Ngozi Okonjo-Iweala speaks at the Peterson Institute at 10 a.m. … House Financial Services holds a ransomware hearing at 10 a.m. … Senate Banking has a hearing on preserving housing stock at 10 a.m. … House Small Business has a hearing on the SBA’s SBIC and SBIR programs at 10 a.m. … Paul Atkins, Robert Jackson, Timothy Massad and Jill Sommers speak on a luncheon panel at the Twelfth Annual Executive Branch Review Conference … Yellen convenes a meeting of the U.S.-China Financial Working Group and the Economic Working Group at the Treasury Department at 11 a.m. ... Fed Chair Jerome Powell speaks at the Washington Forum on the Canadian Economy at 1:15 p.m. … House Financial Services holds a hearing on CFPB transparency at 2 p.m. First in MM: Yellen on the economy — In a speech today heading into this week’s IMF-World Bank meetings, Treasury Secretary Janet Yellen will say that the global economic outlook “remains resilient” but will also acknowledge looming global risks and the continuing U.S. challenge with inflation, Zach Warmbrodt reports. Yellen will note that “global growth has consistently exceeded the predictions of many forecasters.” Last April, when the IMF warned that risks of a hard landing had risen sharply, Yellen said “I wouldn’t overdo the negativism about the global economy.” It appears she made the right call. “Global economic performance has in part been powered by a strong U.S. economy,” Yellen says in remarks prepared for her IMF-World Bank kickoff news conference this morning. “While even one year ago, many forecasted much weaker U.S. economic performance, U.S. GDP growth is strong and expectations have been revised upward since January. The labor market is also remarkably healthy. Inflation has come down significantly since its peak, though we have more work to do.” Yellen will say the Biden administration recognizes that the recovery has been uneven across many other countries, and in that context she’ll stress that American isolation is “over.” “While we expect that America’s economic strength will continue to underpin global growth, we’ve also been engaging with the world to mitigate short-term risks and support sustainable long-term growth,” she said. “We’ll continue doing so this week.” First in MM: Vance warns about seizing Russian assets — Sen. J.D. Vance (R-Ohio) is airing new concerns with a plan to give President Joe Biden the authority to seize billions of dollars in Russian sovereign assets that are under U.S. jurisdiction and use the money to help finance Ukraine’s recovery. Vance wrote in a memo sent to House and Senate Republicans obtained by MM that the bill, known as the REPO for Ukrainians Act, "poses potentially dire consequences for the Western financial system and could hinder a future President’s ability to negotiate an end to the Russia-Ukraine conflict." Vance wrote that "the core concern with the REPO Act is its impact on the auctionability of, and global interest in, U.S. Treasuries." "Sustaining the U.S. fiscal and monetary system relies on the auctionability of, and interest in, U.S. Treasury bonds," the memo says. "If a central bank’s holdings in Treasuries, or any other asset, could vanish at the snap of a finger, it is likely that there will be a decline in parties willing to both attend Treasury’s weekly auctions and purchase Treasuries through dealers." The memo also raises an array of other concerns about the bill, calling it "a significant escalation in the U.S.’s approach to the Ukraine conflict." He said it could tie the hands of a future administration and hinder the prospect of reaching a peace deal in the war. His concerns could quickly become a problem for House Speaker Mike Johnson, who is planning to advance provisions from the REPO Act this week as part of a bid to send aid to Israel, Ukraine and Taiwan. Hitchhiker’s guide to the GOP’s Financial Services race — Eleanor has distilled dozens of interviews with Republicans into five things you should be watching — and why — as Reps. Andy Barr, French Hill, Bill Huizenga, and Frank Lucas vie to replace retiring Rep. Patrick McHenry as the top Republican on the House Financial Services Committee. Those include the cut-and-dry — like fundraising and bipartisanship — but also the more complicated and arguably more consequential, like candidates’ tensions with key corners of the conference, relationships with former President Donald Trump, and pitches that will eventually evolve into presentations.
| | | | A message from ASTA:   | | | | | Johnson’s next move — Our Katherine Tully-McManus and Jordain Carney report that Speaker Mike Johnson told GOP lawmakers that he’ll try to pass four measures this week to send aid to Israel, Ukraine and Taiwan — each in separate bills, according to two Republicans in the private Monday meeting. A fourth proposed bill would include a package of related measures, including a lend-lease deal for military aid, a ban on TikTok in the U.S. and provisions to sell off assets seized from Russian oligarchs. House advances Financial Services Iran sanctions bill — The House voted 294-105 Monday evening to advance a measure sponsored by Rep. Bill Huizenga (R-Mich.) that would direct the Treasury Department to oppose International Monetary Fund assistance and prohibit Treasury from authorizing certain transactions from U.S. financial institutions connected with Iran. The bill is one of several Financial Services Committee measures it has lined up for this week that are aimed at sanctioning Iran following the country’s attack on Israel over the weekend.
| | | | THE GOLD STANDARD OF POLICY REPORTING & INTELLIGENCE: POLITICO has more than 500 journalists delivering unrivaled reporting and illuminating the policy and regulatory landscape for those who need to know what’s next. Throughout the election and the legislative and regulatory pushes that will follow, POLITICO Pro is indispensable to those who need to make informed decisions fast. The Pro platform dives deeper into critical and quickly evolving sectors and industries—finance, defense, technology, healthcare, energy—equipping policymakers and those who shape legislation and regulation with essential news and intelligence from the world’s best politics and policy journalists.
Our newsroom is deeper, more experienced, and better sourced than any other—with teams embedded in the world’s most active legislative and regulatory power centers. From Brussels to Washington, New York to London, Sacramento to Paris, we bring subscribers inside the conversations that determine policy outcomes and the future of industries, providing insight that cannot be found anywhere else. Get the premier news and policy intelligence service, SUBSCRIBE TO POLITICO PRO TODAY. | | | | | | | | | First in MM: A new call for the SEC’s final ESG fund rule — Nineteen financial reform advocacy groups, labor unions and others led by Americans for Financial Reform Education Fund are urging the SEC this morning to push ahead with its ESG fund disclosure rule, pending some changes. In a new letter, the groups argue the SEC should give ESG-focused investment funds more flexibility to determine what information they disclose to investors. But they say ESG-focused funds that consider greenhouse gas emissions in their investment calculus should need to disclose them — with the protection of a legal safe harbor for “good faith” disclosures. CFPB, DOT to host joint hearing — The Consumer Financial Protection Bureau and the Department of Transportation will host a joint hearing on airline and credit card rewards programs next month. CFPB Director Rohit Chopra and Transportation Secretary Pete Buttigieg will moderate a discussion with industry representatives, labor leaders and consumer advocates at CFPB headquarters on May 9, the agencies announced Monday.
| | | | POLITICO IS BACK AT THE 2024 MILKEN INSTITUTE GLOBAL CONFERENCE: POLITICO will again be your eyes and ears at the 27th Annual Milken Institute Global Conference in Los Angeles from May 5-8 with exclusive, daily, reporting in our Global Playbook newsletter. Suzanne Lynch will be on the ground covering the biggest moments, behind-the-scenes buzz and on-stage insights from global leaders in health, finance, tech, philanthropy and beyond. Get a front-row seat to where the most interesting minds and top global leaders confront the world’s most pressing and complex challenges — subscribe today. | | | | | | | | People moves — Tara Burchmore, a TechCongress fellow, is joining Sen. Kirsten Gillibrand’s (D-N.Y.) office as an economic policy fellow, our Daniel Lippman reports. She previously ran Sen. Cynthia Lummis’ (R-Wyo.) Financial Innovation Caucus.
| | | | A message from ASTA: AAdvantage MEMBER? YOUR MILES MAY BE AT RISK. If you book flights with a traditional travel agency, or even an online agency, you could lose your right to earn miles. American Airlines intends to stop awarding miles and loyalty points on May 1, unless you book directly with AA or through a few “preferred” channels, selected with deliberately vague and opaque criteria.
Government, business, rural, and elderly travelers are at greater risk since they are required, or prefer, to book through an agency.
AA clearly fears no regulatory or consumer response. Its new policy is being rushed despite well-documented technical issues, traveler complaints and industry objections.
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