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Market Update

From the Desk of Jason Obradovich, Chief Investment Officer

Have Interest Rates Reached Their Peak?

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

Last week was a huge week for the market. On Wednesday, we had the Federal Reserve meeting where, not only did they leave rates unchanged, but instead of leaving a hawkish tone, they left the market feeling very dovish. Jerome Powell stated that the full impact of higher rates hasn’t worked its way into the economy. 

As I have mentioned in prior episodes, inflation continues to fall and if you add Mr. Powell’s statement to that, it means that even if the Fed does nothing from here, inflation should continue to drop. 

This is exactly the market’s interpretation and we saw yields coming down very quickly as a result. The 10-year is now down to 4.53% after reaching as high as 5.00% just a couple of weeks ago. 

Additionally, last week we saw non-farm payrolls and the unemployment rate. Payrolls added in October were a steep drop from September and came in below the market’s expectation. Additionally, not only did the unemployment rate inch up to 3.9%, but wage inflation also dropped slightly.

All of these events last week will continue to put downward pressure on rates as market sentiment is beginning to change towards a more dovish Fed. We still have to be very careful of an unexpected rise in inflation or a surprise jobs report, but at least as of today, the market is seeing very good signs that interest rates may have already hit their peak.

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

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