Housing Market News & Updates

Hello everyone, welcome back to the Mortgage Rundown. Today we are going to talk about what’s happening with interest rates.

2024 has not been the year everyone was expecting so far. Treasury rates are actually up nearing 90bps since the end of 2023.  Taking a look at the graph on your screen, you can see that the 3 Year Treasury is up 87bps since January 12^th. 

The prospects of the Federal Reserve lowering rates 3 times or more has been basically eliminated as a possibility with inflation still stubbornly above the Fed’s target. Last week headline CPI was up 3.5% year-over-year-old vs the market’s expectation of 3.4% and more importantly, core CPI was up 3.8% vs the market’s expectation of 3.7%. 

It may be only a 0.1% difference, but it was a reminder to the market that inflation is very stubborn and the Fed doesn’t need to move quickly thanks to a pretty resilient economy and job market.

Speaking of inflation, next week is the more important PCE for March, which may confirm the stubbornness of inflation and likelihood that the Fed will keep rates higher for longer. As of today, the market is only pricing in 1.5 Fed moves this year vs the original three that the FOMC had projected. 

Is the market overreacting to the CPI report or will inflation continue to bounce around these levels and give the Fed sufficient ammunition to keep rates higher for longer? We will likely find out next Thursday when PCE comes out.

That’s it everyone from the capital markets desk this week. Thank you all for watching and have a great day.

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Hello everyone. Welcome back to the Mortgage Rundown. Today we are going to talk about what’s happening with interest rates.

Well, the FOMC came and the FOMC went. Last week the Federal Reserve kept its benchmark rate unchanged for a fifth straight meeting while signaling that it still expects to drop rates three times this year. There is still a lot of debate as to whether or not three will be the magic number and if that will begin in June or July.

It does appear that the market finally has acquiesced that the Fed will not deliver five or more interest rate cuts this year and hopes that this would start during Spring are also all but crushed.

One thing of interesting note is that the equity market is completely ignoring the Fed. Stock indices continuing to push higher and higher every month and it appears that market is very focused on the lack of bad news, the very likelihood of a soft landing, compounded with the fact that it has confidence the Fed will step in if there is any type of hiccup with the economy.

Today we have important data on Q4 GDP along with the GDP pricing index. And just as important, or perhaps even more important, is that tomorrow we have PCE, the Fed’s coveted inflation gauge.

That’s it everyone from the capital markets desk this week. Thank you all for watching and have a great day.