stephen davis and our own steve liesman. meantime, one place that's been a little more certain, i guess you could say bond yields dropping significantly. it's causing a stir in the housing market. and diana olick is here with the very latest. diana. well, kelly, after several weeks of declines, mortgage. demand finally came back to life last week, jumping 20% overall from the previous week. that's the third biggest weekly jump in the last five years. and it's all thanks to the continuing slide in mortgage rates. the average on the 30 year fixed for last week dropped to 6.73%, from 6.88% for loans with 20% down. rates are now 29 basis points lower than they were the same week a year ago. the big driver in demand was refinancing. those applications jumped 37% for the week and were 83% higher than the same week a year ago. now, while it was definitely a big gain, i would note a bit of caution here that the volumes are still so low that it kind of exaggerates those percentages. mortgage applications to buy a home rose 9% for the

all right, steve liesman, i want to go to you now. how much more can american consumers expect to pay in the short term? you know, i went grocery shopping this last week. i swear i was already noticing a difference, but i don't know if that's just in my brain. like, when are we going to start to see prices really go up? >> well. >> it could be happening. >> already because. >> some companies were. stockpiling stuff and that could have driven. up prices in the stockpiling. real quick, i want to back up what aaron was talking about, because we had secretary lutnick on our air this morning, and he went back and forth between, oh, it's about fentanyl. oh, why are any american cars made in canada? so it was very unclear, listening to the full interview of secretary lutnick, what the reason for these tariffs are. and it's not clear the administration has made that clear to our trading partners. as for prices, it can go anywhere from the full price being passed along, or even more than the full tariff being passed along, because some of thes

cnbc senior economics reporter steve liesman. sam stein, managing editor at the bulwark and usa today washington bureau chief susan page. i want to begin with tariffs and the economics here, because that moment right there is one that is having immediate impact when he talks about how there are more tariffs to come, steve, and how the nation is going to have to essentially tough it out for a short period of time, he's saying. what is the impact been so far and what's the outlook? >> yeah. let me give a little. >> back backdrop here. background, which is that people thought that. >> if the market. >> were to reject some of president trump's policies, that president trump would react and he would use the stock market as a barometer. well, he went into that speech last night with the market having sold off pretty sharply and pretty directly as a result of tariff headlines. that was not the case, though, when in that he really doubled down on tariffs threatening more to come. said it was a fight for the country's soul, i believe. and

for more on that let's bring in our senior economics correspondent steve liesman. is that is that the correct read? steve, i know you can't look at the beige book and factor in tariffs because the beige book is already out and tariffs are just taking place. but you wouldn't look at what happened today in that read and say, oh, we've got a really bad economy. >> no you wouldn't scott. but forgive me, my friend, for correcting you a little bit here on national television. but the beige book, which has all the anecdotes from around the 12th federal reserve district, did find that tariffs and the uncertainty over fiscal policy are having a profound effect on the current situation and the outlook. as you said, the beige book said overall economic activity. it rose slightly, a kind of tepid characterization with consumer spending lower on balance. but tariffs were said to have boosted uncertainty, with some reports that they already may be increasing prices again, as scott said, this is before the tariffs took effect, but it was already out there. some of one bank reporte

in fact, let's get to steve liesman with those headlines. hi, steve. >> yeah, lots of tariffs. kelly in the beige book here. what we're seeing is excuse me one second. economic activity rose slightly in the seven in the 12 federal reserve districts. six reported no change. four said moderate growth. two said even a slight contraction. consumer spending was said to be lower. on balance, increased price sensitivity for discretionary items among consumers, especially low income consumers. now, some we've been talking about there was unusual weather that was set to weaken demand for leisure and hospitality. we've all seen that maybe across different other sectors. vehicle sales were said to be modestly lower. now a lot of tariff stuff in here. manufacturers expressed concern over the impact of trade policy changes. real estate was hurt by some. diana olick talks about all the time inventory constraints. contacts expressed nervousness over tariff on lumber and other materials when it came to housing, but overall expectations were slightly optimistic. maybe a bit of a downgrade from

steve liesman joins us from washington. it's great to have you. >> both here. steve. >> just kick it off for us on the latest odds. >> i guess they're saying the fed's. >> not going to be stuck. we're pricing. >> in what. >> three cuts at this point. >> yeah pretty aggressive kelly and good afternoon. what we're looking at here is three cuts now priced in beginning. hang on i want to give you a fresh quote here. there you go. beginning already in june for the first 1st july for the second one. and then we have a third one priced in around october. right now that's where we're at in terms of where the funds rate is looking at. i have my concerns with the timing of that, kelly, because i think the fed has to make sure that it sees the tariff impact pass through. and now you hear president trump threatening additional tariffs on top of his tariffs here. so where this all shakes out and when it hits the index it would be very strange for the federal reserve to announce a quarter point rate cut in a month that say for example, the cpi went up by a percentage point be

that's steve liesman down in d.c. as you see. how are you thinking about you know that variable now the fed's in a bit of a pickle here. they wanted to be patient. and they felt and they were confident that they had the luxury of being patient. now if you have a more dramatic slowdown than some had predicted their hand could be forced. >> yeah. well, first of all, i'll say with respect to the atlanta fed gdp number, this is a moving target. and for sure. yeah. probably not going to be. >> too sure. the point though. yeah. it's not so much the number. it's the fact that now you've got two weeks in a row negative. >> yeah. that's right. and the direction matters more than the absolute number. it's growth still probably going to be positive modestly so not encouraging but but probably won't be -2.8 i think the issue for tariffs to pivot off what steve said i think he left out one uncertainty in the economics community, which is by how much a price is going to go up. and something is an investor that you have to wrestle with when loo

our steve liesman takes a closer look at that this morning. d morning karl. fed fund futures on the move responding to terrorists by president trump. by pricing in rate cuts from the fed much more aggressively. markets now pricing in three cuts from the fed this year with a greater than 50% probability of a first cut in june. a second one in july and now a third one in september. but will the fed come to the rescue? and how quickly fed officials have said they're going to respond to weakness in growth and employment, but they can only do so if inflation is headed to the 2% target and inflation expectations remain under control. but five year inflation expectations measured by the university of michigan will. they shot up recently to 3.5% on those broad tariff concerns among the american public? that's the highest level in 31 years. market based expectations are lower, but remain elevated. krishna guha evercore isi says the road to a june cut runs through this moderate tariffs. that would mean backing off the current levels against mexico and ca

steve liesman is here. and who better to explain than steve? >> yeah. you know, stagflation doesn't normally happen because when growth weakens, prices tend to fall along with it. that is, unless artificial price increases. for example something like tariffs are introduced. so conventional wisdom suggests that tariff prices will pass through the system, raise prices one time without sparking wider inflation. but there's another side of the debate that's more troubled about those tariffs. they say inflation is now above target. short term inflation expectations are elevated and tariffs can reduce productivity, reducing competition, making companies fat and lazy with the protection. and companies have pricing power. ben ammons of fed watch advisors writes businesses are far more attuned to passing costs today because they have pricing power compared to 2018, when inflation was weak and consistently below 2%. new york fed president john williams, speaking to bloomberg yesterday, said much of the tariff cost does pass through to the consumer and inflation c

steve liesman is here. cnbc senior. >> economics reporter. >> molly jong-fast. >> special correspondent. >> for. vanity fair and msnbc contributor. >> and pulitzer prize winning david rohde. >> he's an nbc national security editor and author of the book. >> where tyranny begins. >> the justice. >> department. >> the fbi. >> and the war. on democracy. >> david, you have. >> been covering. >> foreign. affairs for a long, long time. >> i want. >> your reaction. six hours after watching what you saw in the. >> white house. >> but i. want to. >> understand. >> how did you feel. >> watching it in. >> the moment? what went. >> through your mind? >> shock. you know, it was extraordinary. unprecedented. >> and it was. a role. >> reversal in. >> that you have an american president. >> you know. >> normally the american president is like defending. >> the democracy. >> the nascent. >> democracy. >> this this young. president of ukraine. and as you know, the danger is the autocrat, often russia. >> so it. >> was. this

. >> steve liesman. >> is here. cnbc senior. economics reporter. molly jong-fast, special correspondent for vanity fair and msnbc contributor and pulitzer prize winning. david rohde. he's an nbc national security editor and author of the book where tyranny begins the justice department. the fbi, and the war on democracy. david, you have been covering foreign affairs for a long, long time. i want your reaction. six hours after watching what you saw in the white house. but i want to understand, how did you feel watching it in the moment? what went through your mind? >> shock. >> you know, it was extraordinary. unprecedented. >> and it was. >> a role reversal. >> in that you. >> have an american president. >> you know, normally. >> the american president. >> is like defending the democracy, the. >> nascent democracy. >> this this young. >> president of ukraine. >> and as you know, the. the. danger is the autocrat. >> often russia. >> so it was this sort of stunning role reversal. >> and it. >> just. amazed me. >> but the tone. >> was what was so unusu

senior economics reporter steve liesman is looking at that debate. hi, steve. >> mike good morning.mp making clear higher tariffs are going to be with us for a while. but what about their impact on prices? conventional wisdom suggests higher prices pass through the system without necessarily sparking wider or lasting inflation. but there's another side to this debate the worries that tariffs and inflation could be longer lasting. inflation is now above target. short term inflation expectations have been elevated. and tariffs reduced productivity. productivity keeps inflation down. and companies right now may have pricing powe, ben simmons of fed watch advisors wrote yesterday. businesses are far more attuned to passing costs today because they have pricing power compared to 2018, when inflation was weak and consistently below 2%. in fact, adam posen from the peterson institute tells me that protecting domestic companies with tariffs can give them more pricing power by reducing competition. he says big national companies have protected markets, tend to get fat and lazy. a lot of econ

senior economics reporter steve liesman joins us with a look at that angle of the story.an they react when you don't know how long it's going to last, steve. and i would think they'd have to wait for some data points since they by definition are data dependent. would they take some preemptive? would they make some preemptive moves? i can't imagine. >> no. the preemption right now, joe. >> is the talking. >> and the gaming. >> out and trying to give. people sort of a heads up of how they're thinking about this. we got some of that yesterday. tariffs will create this double edged growth scare potentially depress economic activity at least for a time while raising prices. and that could sort of tie the fed's hand to its ability to respond. the fed officials seem to be telegraphing just what joe said. it's going to be difficult for them to cut rates into a tariff induced rise in prices. at best, they're saying they need to be patient to see how the price increases work through the system. >> i'm going to be trying to parse out what our price level effects from what our inflat