Fed Hikes Rates; Rates Drop Sharply. Here’s How That Works
There was some debate as to whether or not the Federal Reserve would hike the Fed Funds Rate today, although the consensus was for a 0.25% increase. That’s exactly what the Fed delivered. Additionally, markets were (and still are) betting that the Fed cuts rates by roughly 0.75% by the end of the year, but the Fed’s just-released forecasts show zero rate cuts by the end of the year and slightly HIGHER rates by the end of 2024. Despite all this, Treasury yields (a benchmark for mortgage rates) and mortgage rates themselves fell significantly after the Fed news came out. Why in the world could that happen? First off, the Fed Funds Rate is not a mortgage rate, nor does it directly affect mortgage rates by the time the Fed actually hikes or cuts. More importantly, Fed Chair Powell spoke about upcoming tightening of lending conditions due to the recent banking drama. That may seem like a simple enough comment, but it carries a lot of weight in terms of shaping economic momentum. Lending and credit are critical to growth and inflation. If lending subsides (fewer loan programs or more restrictive requirements to qualify), it puts additional downward pressure on inflation. And inflation is the key reason rates have remained high. Long story short, in spite of the Fed rate hike and the relatively unchanged outlook for 2024, the market saw some indication of a policy pivot in Powell’s comments–some shifting of the big picture cycle of economic growth and inflation. Either that, or Powell’s warning on banks caused investors to fear additional banking issues in the days/weeks ahead.
Compare current VA mortgage rates â USA TODAY Blueprint – USA TODAY
Compare current VA mortgage rates â USA TODAY Blueprint USA TODAY
What Are Asian Options and How Are They Priced?
Asian options (also known as average strike options or average options) are a type of exotic option that is priced according to the average price of the underlying commodity, as opposed to the spot price. Read on for how theyâre priced, how they work, pros and cons, and more. What Is an Asian Option? Asian […]
The post What Are Asian Options and How Are They Priced? appeared first on SoFi.
GO2bank Review for 2023
5 Home Remodeling Projects to Boost Your Property Value in Bellevue
SOTM 73: Working-Class Americaâs Last Shot at Homeownership â BiggerPockets’ David Greene
With home prices reaching record highs, many Americans are waiting for âthe right time to buy.â That time may never come. On todayâs podcast with BiggerPocketsâ David Greene, we discuss the factors driving current market conditions and speculate on just how expensive homes could be in years to come. Itâs a scary thought, but this might be working-class America’s last shot at homeownership. Hear why on this State of the Market.
Claim Real Estate Discounts, Free Trials, and More
Rebus University – Get Over $10,000 in Real Estate Training for as Little as $97
PadHawk – Find Your Market’s Best Leads for FREE with a 7-Day Trial
Roddy’s FLS – Discover Unbeatable Real Estate Deals with a FREE Foreclosure List
One of The Most Important and Interesting Fed Days in a Long Time
It’s difficult and probably not that important to rank today’s Fed day against other iterations over the past few years. It’s easy to say that it is probably the most interesting Fed day in at least a few years. We wouldn’t even entertain competition after the start of the tightening in late 2021 and that was arguably broadcast fairly clearly. The only reason to bring this up is to reiterate that there’s a lot to learn about how this Fed regime will balance financial stability against its inflation fighting goals. Past comments give a clear nod to inflation fighting, but this is their chance to confirm it with a rate hike and no major change in the dot plot. Timing of events this afternoon: 2:00PM ET – Fed Announcement AND the dot plot. 2:30PM ET – Fed Chair Powell press conference begins We continue to assume that the dot plot will be at odds with the market’s expectations based on Fed Funds Futures. Dots were fairly unified for a 5.0-5.25 rate by the end of 2023 as of the December meeting. If anything, hawkishness increased since then. Fed Funds Futures have a drastically different take for the end of 2023 after the recent bank drama: Futures admittedly aren’t designed to predict the dot plot. We would expect the dots to act as a policy tool to some extent even if Fed members secretly suspect rates could end up lower than their dot suggests. More simply put, the dots are based on the info available today about inflation and its trajectory whereas futures go a step farther and consider how recent events are likely to shape inflation and the economy in the near future. Bottom line: it won’t be a surprise to see the dots at odds with futures. It will simply be interesting to see how big the differences are and how markets react to that. The stakes for longer-term rates are bookended by 3.40 and 3.6 yet again, although 3.60 is a much softer pivot point seeing as how it’s been broken twice in the past few months.
U.S. Existing-home Sales Rise For The First Time In 13 Months, Surging 14.5% In February
Only This Retailer Beats Amazon for Customer Satisfaction
The winning company caters to some particular members of the family.