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.

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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.

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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.

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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!

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!

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.

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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.

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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 14^th and let’s see what the Fed does next!

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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!

Well that was close… The debt ceiling problem has finally been resolved. Now, everyone will not be happy about the way it ended or what concessions had to be make in order to make it work, but that’s a different video. Today we have to go into this week acknowledging that its passed means which means low to no interruption between the mortgage and real estate industries and the government agencies we interact with during the process of buying and refinancing homes. Thank goodness.

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So what does that mean for mortgage rates Andy?

Mortgage rates had been headed up last week due to the numerous setbacks in the debt ceiling negotiations. Also, there has been a return in buyer appetite and the mortgage market seems to have found a sweet spot. There are people willing to still buy homes at today’s rates because they would rather be IN the market than OUT of the market. The tight sideways range of rates we’d seen just trended upwards last week and might create a new pricing zone for the type of interest rates we will see ahead.

The markets will now turn their focus on fed member sentiment and how likely The Fed is to pause at their next meeting in June, or surprise the markets with another rate hike due to inflations slowing pace not being slow enough.

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Here’s a quick look at what we’re watching in the markets this week:

Monday, today. It is Memorial Day, banks and financial markets are closed.

Tuesday: We get Consumer confidence reading.

Wednesday: JOLTS and several Fed members are speaking

Thursday: ADP non farm payroll & ISM manufacturing PMI come out

Friday: Average Hourly earnings, non-farm employment change, and Unemployment rate hit us.

And above all, we just need to know what this debt ceiling resolution looks like so we can make any adjustments

And that’s it for this episode. Let us know how we can help you win in mortgage and real estate!

…

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!

Last week was mostly a dud when it came to news except a few surprises. #1 National Home Builder Sentiment and #2 Core retail sales and retail sales

First National Home builder sentiment came in at 50 which marks it’s fifth month in a row of increase. Yup it’s been on the rise for the past 5 months. On one hand this is great news as this reading of 50 is back to Neutral on a scale of 0 – 100. On the other hand…it’s still 50 and spent way too long in the trenches of the 30s and 40s while mortgage rates got clobbered in the fall and end of 2023. Builders are finally seeing that demand has returned as buyers and real estate professionals have all come to the conclusion in lock step, that the state of the market is the state of the market, and if you want to get in a home still…you better get out there and start looking! The only thing that could make this EVEN better is for next months reading to be above 50, even if it’s just by a little bit.

As for Core retail sales and retail sales – they are starting to show cracks as the US consumer pulls back on spending in a lot of categories that economists and analysts watch. This is also happening across ALL economic levels, yes, even among the upper income earning households, spending is being curbed.

This is interesting because the Buyer resurgence in mortgage applications, open escrows of existing home sales, and new builds, suggests there is fuel in the tank when it comes to the appetite for homes. And that makes sense because we make conditional exceptions for basic human needs like food clothing and shelter. The real story here will be discretionary spending across industry and economic status. That’s really the ember people have their eyes on as it’s typically a leading indicator of overall economic trajectory when the sense of headwinds become more palpable.

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So what does that mean for mortgage rates Andy?

Mortgage rates will continue to march sideways like they have for weeks. It’s become customary for rates to move up and down in a tight 0.25% price range when there’s no major macro direction to attach to. Expect that to be the same this week. We are also tipping into the window where all eyes and ears begin to turn towards the upcoming fed meeting Wednesday June 14^th. The markets are all grasping for any hints it can latch onto prior to the rate release and press conference. You will also begin seeing more predictions on whether there will be an additional rate hike, rate pause, change of tone, and descriptions of how the fed members are feeling about their policies.

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Here’s a quick look at what we’re watching in the markets this week:

Tuesday: We get Flash Manufacturing PMI and Services PMI & New Home Sales

Wednesday: Federal Reserve meeting minutes will come out (there should be NO surprises here, but if there are…watch out!)

Thursday: We get Preliminary GDP – which has been a crap shoot as of late and also unemployment comes out. There is a bit of controversy around this little GDP topic because there’s a mostly unknown trend of reporting GREAT numbers on the day they’re supposed to be released and then quietly issuing the revisions afterwards when almost no one’s looking….oh, and the revisions are terrible by the way, they’ve been way worse than initially reported, but don’t get made at me for reading numbers on a report, they’re the ones fudging the figures.

Friday: Core PCE (The feds favorite measurement of inflation), Personal income and personal spending…all of which kind of mix together and paint a picture of how the consumer is doing when it comes to income vs. spending. If anything has a chance at stirring up optimism or dashing peoples hopes this week, Friday will be the day.

And that’s it for this episode. Let us know how we can help you win in mortgage and real estate!

…

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!