State of Rates
September 22, 2023
Latest Market Commentary.
The Federal Reserve's eagerly awaited September meeting unfolded this Wednesday, and those who were hoping for a light at the end of the tunnel quickly realized it was an oncoming freight train.
While the Fed's outlook for 2023 remained consistent, with a forecast of an additional 0.25% rate increase at the November meeting, a significant shift in tone caught the market's attention. The central bank continued to echo their "higher for longer" stance but now coupled it with the grim news that interest rates are poised to remain elevated for an extended duration. Unfortunately, this wasn't a reference to Snoop Dogg's music, but rather a commentary on the future of interest rates. The market swiftly absorbed the Fed's forecast of reducing rate cuts by 0.5% for the upcoming year.
In response, the market reacted with remarkable speed and intensity. The 10-year Treasury yield shot up to levels not seen in nearly two decades triggering a ripple effect on mortgage rates pushing them to highs not seen since 2000.
The Federal Reserve left no room for ambiguity in their trajectory, emphasizing that interest rates will continue their ascent until inflation subsides and real damage is inflicted on job growth. The looming question remains - when will this economic reckoning come to pass?
Your Weekly Market Movers.
Tuesday Thursday
GDP Advance Q2 8:30 am Core PCE (MOM) at 8:30 am
Core PCE (YOY) at 8:30 am
Should I Lock or Float?
We are strongly biased towards locking rates at application vs. floating until the data tells us otherwise. If you are greater than 60 days out and have a major appetite for some risk, there is potential upside by waiting until you’re 30 days out or less, but you’d need to time it nearly perfectly!
The Housing Market in Three.
1.) Existing home sales decreased to 4.04 million SAAR (seasonally adjusted annual rate) in August.
2.) Inventory from August dropped to 1.10 million down from 1.11 million in June and down 14.1% from August.
3.) Active Inventory declined, with the for-sale homes lagging year ago levels by 4.4%.