Housing inventory has been plaguing most of the country in 2023. However the recent resurgence of Homebuilder confidence and the increase of housing starts led us to discuss is the “housing recession” over?…and did it even really happen?
Mortgage rates this week are most likely going to continue to trend sideways, having it’s ups and downs in relation to which way the wind blows and market reaction to economic news, especially anything that relates to inflation – good or bad.
And here’s why, last week Jerome Powell spent 2 days on Capitol Hill. In remarks to the House Financial Services Committee on Wednesday, Jerome Powell cautioned that he and all other Fed members expect to raise interest rates further to bring down inflation. The only concession he made was that it appears the Fed won’t moves at the expedient pace they have since March 2022.
On one hand, they’re confident about their actions up until now, but maybe not SO BOLD as to think their work is done.
And I quote, “Given how far we’ve come, it may make sense to move rates higher but to do so at a more moderate pace,” which came straight from Jerome Powell during the question-and-answer session with committee members.
Here are some of the key points we’re watching closely as we creep closer and closer to their next rate and policy decision coming up in July.
In addition to these key points, Powell continues to shrink its balance sheet, which has ballooned to over $9 trillion in recent years. He said that the Fed will continue to reduce its balance sheet by allowing some of its Treasury and mortgage-backed securities to mature without being replaced. Remember, these are the instruments that helped us have historic low rates in 2020 and 2021.
In general Jerome Powell’s testimony was met with mixed reactions from lawmakers. Some criticized the Fed for not doing enough to raise interest rates sooner, while others expressed concern that the Fed’s actions could lead to a recession….and they’re both right. Which reinforces our opinion we’ve been sharing with you: The Fed is Stuck. They know it. We know it. They know that We know it.
Overall, Powell’s testimony gave a clear indication that the Fed is serious about bringing down inflation, even if it means taking some risks to the economy. It remains to be seen how successful the Fed will be in its efforts, but Powell’s testimony suggests that the central bank is determined to do whatever it takes to achieve its goals.
…
And here’s a quick look at what we’re watching in the markets this week:
Tuesday: Consumer Confidence reading comes our and New Home Sales data
Wednesday: Jerome Powell is slated to participate in a panel discussion at the European Central Bank Forum on Central Banking in Sintra, Portugal.
Thursday: Final GDP Quarter over quarter is expected to come in at 1.4% which is Lower than we’d like to see in a thriving economy, but this IS in line with Fed expectations. We also get unemployment claims and pending home sales. Pending Home sales is important as it shines a light on inventory which we desperately need and will likely have a light impact on overall rate policy for the time being.
Friday: is all about Core PCE, one of the Fed’s favorite measurements! Look for this number to be in positive territory still, which means inflation still has not flattened, but keep an eye open for a miss to the high side of low side. A miss to the high side could weigh in on a Fed rate hike possibility in July, and a miss to the low side could hint at a possible July Pause once again, in order to gather more data.
…
Thanks again for tuning in to Monday Mortgage Minute.
Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.
Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.
We’ll see you again next week!
The Fed paused Rate hikes, but revealed they think their terminal rate should be 0.50% higher by the end of the year. Why the pause now? Why not raise immediately? What are they waiting for? Will they raise rates at July’s meeting? Where will mortgage rates go? What EXACTLY are they going to be watching in the economy? …so many questions.
Once again it’s Fed Week. Wednesday Jerome Powell and the Federal Reserve will conclude their 2 day meeting, issue their interest rate decision, give prepared comments and conduct a Q & A with the press.
Since the last meeting, the MAIN topic everyone had their focus on was the Debt Ceiling, even though the Fed has no direct impact on that entire situation. Although, there is an Indirect impact in that the Fed’s voice on matters related to monetary policy, totally matters. Same goes for Treasury secretary Janet Yellen. Although serving in different capacities in different entities, their cohesion about the markets in general, government solvency, inflation, monetary policy, and the economy always have the markets ears wide open. And this week is one of those weeks.
We talked about this exact scenario in last week’s show – This is the week we get the answer about the big elephant in the room. Will the Fed pause rate hikes this meeting and then issue one in July – OR – will see a surprise rate hike now and THEN a pause in July? I personally think it’s completely up for grabs with the only difference being when the market freaks out and reacts with volatility. Arguments for both sides of this scenario have merit and valid data to support either outcome we live through in June and July. The BIGGER issue on the horizon will be WHAT HAPPENS AFTER JULY? There will be so many unanswered questions, and the Fed is going to be faced with the outcome we talked about last episode – they’re gonna take one in the chin if this all goes wrong. But even then, will they care? Right now it really doesn’t feel like it.
…
As for mortgage rates, they will likely be slow to start the week as everyone awaits the Fed decision and market reaction. If the Fed does decide to make a rate hike this month, then we could see mortgage rates bounce around for the following 24-48 hours, but if they pause on the rate hikes then the current 0.25% range we’re in now will be the course for the upcoming weeks that lead into the July meeting.
…
And here’s a quick look at what we’re watching in the markets this week:
Tuesday: Month over month, year over year, and CORE Consumer Price Index, or “CPI” These figures are likely to already be known by the Fed in advance of this weeks meeting, but will be publicized for the markets to digest and determine how to translate that into the overall goals the Fed has been touting for well over a year….2% inflation, which we’re STILL nowhere near…
Wednesday: Month over month, and CORE Producer Price Index, or “PPI” are released. For those of you new to the show, PPI measures the change in the price of finished goods and services sold buy producers, which eventually find their way into the Consumer Side of inflation, but vary based on type of products and price points. CORE PPI measures those SAME things, but excludes Food and Energy, which are considered “too volatile” despite the fact that we still end up paying market price for them.
Thursday: The markets will all be digesting the Fed’s decision, market data from earlier in the week, AND STILL hit us with a lot of really important measurements: Core Retail Sales, Empire State Manufacturing Index, Retail Sales, and Unemployment Claims.
And finally on Friday we get the University of Michigan Preliminary Consumer Sentiment. Whew what a crazy packed week this one will be. Mark this down as super important. When get to the end of the year and look back at 2023, THIS will be a week to remember.
…
Thanks again for tuning in to Monday Mortgage Minute.
Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.
Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.
We’ll see you again next week!
Andy and Brian unpack where we’re at with rates half way through the year. How did we get here, where are we at currently, and where do we think the rates will head by the end of 2023?
Once again it’s Fed Week. Wednesday Jerome Powell and the Federal Reserve will conclude their 2 day meeting, issue their interest rate decision, give prepared comments and conduct a Q & A with the press.
Since the last meeting, the MAIN topic everyone had their focus on was the Debt Ceiling, even though the Fed has no direct impact on that entire situation. Although, there is an Indirect impact in that the Fed’s voice on matters related to monetary policy, totally matters. Same goes for Treasury secretary Janet Yellen. Although serving in different capacities in different entities, their cohesion about the markets in general, government solvency, inflation, monetary policy, and the economy always have the markets ears wide open. And this week is one of those weeks.
We talked about this exact scenario in last week’s show – This is the week we get the answer about the big elephant in the room. Will the Fed pause rate hikes this meeting and then issue one in July – OR – will see a surprise rate hike now and THEN a pause in July? I personally think it’s completely up for grabs with the only difference being when the market freaks out and reacts with volatility. Arguments for both sides of this scenario have merit and valid data to support either outcome we live through in June and July. The BIGGER issue on the horizon will be WHAT HAPPENS AFTER JULY? There will be so many unanswered questions, and the Fed is going to be faced with the outcome we talked about last episode – they’re gonna take one in the chin if this all goes wrong. But even then, will they care? Right now it really doesn’t feel like it.
…
As for mortgage rates, they will likely be slow to start the week as everyone awaits the Fed decision and market reaction. If the Fed does decide to make a rate hike this month, then we could see mortgage rates bounce around for the following 24-48 hours, but if they pause on the rate hikes then the current 0.25% range we’re in now will be the course for the upcoming weeks that lead into the July meeting.
…
And here’s a quick look at what we’re watching in the markets this week:
Tuesday: Month over month, year over year, and CORE Consumer Price Index, or “CPI” These figures are likely to already be known by the Fed in advance of this weeks meeting, but will be publicized for the markets to digest and determine how to translate that into the overall goals the Fed has been touting for well over a year….2% inflation, which we’re STILL nowhere near…
Wednesday: Month over month, and CORE Producer Price Index, or “PPI” are released. For those of you new to the show, PPI measures the change in the price of finished goods and services sold buy producers, which eventually find their way into the Consumer Side of inflation, but vary based on type of products and price points. CORE PPI measures those SAME things, but excludes Food and Energy, which are considered “too volatile” despite the fact that we still end up paying market price for them.
Thursday: The markets will all be digesting the Fed’s decision, market data from earlier in the week, AND STILL hit us with a lot of really important measurements: Core Retail Sales, Empire State Manufacturing Index, Retail Sales, and Unemployment Claims.
And finally on Friday we get the University of Michigan Preliminary Consumer Sentiment. Whew what a crazy packed week this one will be. Mark this down as super important. When get to the end of the year and look back at 2023, THIS will be a week to remember.
…
Thanks again for tuning in to Monday Mortgage Minute.
Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.
Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.
We’ll see you again next week!
Today we’re going to take a look back at some of the more memorable moments from the first half of our Show season. This year has definitely had a lot of ups and downs with the Fed, the economy, bank failures, buyers resurgence, among other things, so we hope that you enjoy this mid year check-in recap show. With this many doozies, I’m sure the second half of the year has some surprises up it’s sleeve…I mean why wouldn’t it?!?
In the light of all the debt ceiling negotiations where no one is happy, but everyone seems to be patting themselves on the back for striking a deal nontheless, mortgage rates really went up dramatically two weeks ago, but then last week they eased back down to where they came from.
Now we start off the month of June in the exact same rate environment that we were in during the middle May. Effectively no noticeable change if you eliminate the last 2 weeks of chart activity.
…
Now we have to about it, Debt Ceiling. Well, it finally happened both the House and the Senate passed the debt ceiling bill. There’s still a lot of dust to settle, but for now we have to return our full focus and attention back to data points that effect interest rates for the foreseeable future. We’re coming up on “dark week,” which is the week before the Federal Reserve comes out with their interest rate decision, policy statement, and press conference Q & A. They have a lot of pressure on them this month because inflation is not slowing fast enough, more jobs are being created than projected AND their desired unemployment number isn’t being met. In fact, they need unemployment to be 4.5% and it’s still only at 3.7%.
As contrary as it sounds, the fight against inflation is showing that there still may be quite a ways to go before they actually see the outcome they’re hoping for. Take that unemployment rate for example. It was 3.7% in the month of May, and they need it to be 4.5% by the end of the year. Unemployment pressure on spending generates a force effect that they claim is similar to raising rates, but since it’s so slow to make its way through the economy, they are really getting themselves in a bind. Essentially when unemployment is low, spending continues, and higher prices remain. When unemployment spikes, spending gets curbed, and prices can ease or come down. So if they can’t rely on unemployment to aid in price reductions, then that means the Fed still has plenty of room for future rate increases in order to generate downward pressure against inflation and claim victory.
But it gets even worse for the Fed. Up until this point, their communication has been the terminal rate needs to be between 5.0-5.25% which we are at right now….and the data points they’re measuring to gauge success or failure aren’t playing along. So now we have a real toss up of what will happen at the June Fed meeting. Will they raise rates and once again adjust their target terminal rate to 5.5% 5.75%, or higher? Will they pause at this meeting in the hopes that data comes around in their favor before the July meeting and that next rate decision?
I mean, we could legitimately be starting down the barrel of a policy vs. expectations vs. reality standoff.
So if they need more time to wait for impacts to hit the data like they are expecting, will it happen this month? or the next month? Or the month after that? And how long will they continue to kick the can down the road before they have to take action again by increasing rates.
Since nobody knows, this is the big unanswered question and the elephant in the room. If the Fed is going to tell us that they are responsible for monetary policy, maximum employment, and price stability, then they are really going to take one in the chin when it comes to who’s to blame for those things not happening and also for failing to fight inflation fast enough. It’s almost a lose lose situation and a slow burn because the data continues to work against them very very slowly. Painfully slowly.
…
Here’s a quick look at what we’re watching in the markets this week:
Monday: ISM Services PMI which has seen a precipitous decline in 2023 so far
Thursday: Unemployment claims takes the stage, and based on what we talked about today…it will be an important measurement.
Other than that, there’s nothing earth shattering coming out this week. Set your eyes on Wednesday June 14th and let’s see what the Fed does next!
…
Thanks again for tuning in to Monday Mortgage Minute.
Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.
Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.
We’ll see you again next week!