fed

Counting The Hours Until Fed Day

While yesterday’s Credit Suisse concerns were serious, the last official major bank failure happened 5 days ago. That’s a very long time considering the way financial markets are trading.  After all, a swift drop of more than half a percent in 10yr yields is a big deal.  Or is it? A shorter term chart gives a distinctly different impression versus a longer term chart.  Ask the latter and we’re just consolidating in a wide range–still waiting to see if inflation and economic data justify additional Fed tightening.  The most definitive comments on that are likely to come from the Fed itself in just under a week.

Mortgage rates are volatile. Should you lock your rate today? – KCRA Sacramento

Mortgage rates are volatile. Should you lock your rate today?  KCRA Sacramento

Half the Homes, for 50% More Money: An Honest Look at Homebuyers’ New Reality

Our latest column will explore what the latest real estate data means for both homebuyers and home sellers.

Fed Rate Increase Could Signal Lower Mortgage Rates Ahead – NerdWallet

Fed Rate Increase Could Signal Lower Mortgage Rates Ahead  NerdWallet

Summers warns Fed against ‘financial dominance,’ urges rate hike

Lawrence “Larry” Summers, former U.S. Treasury secretary.Kiyoshi Ota/Bloomberg Former Treasury Secretary Lawrence Summers said the Federal Reserve shouldn’t be spooked into easing its campaign to contain inflation out of excessive concern about a credit crunch in the wake of the recent banking turmoil. “It would be very unfortunate if, out of solicitude for the banking … [Read more…]

The Fed Will Still Raise Rates in March, And That’s Why Rates May Keep Falling

There’s certainly a chicken/egg problem when it comes to interest rate news. Is it the Fed’s decisions that move rates? Or do market forces move rates, thus forcing the Fed to react? The answer is somewhere in between. If inflation and economic growth were always positive, low, and stable, the Fed would never lift a finger, but they are compelled to act when stability is threatened. Since March 2020, the Fed has acted quite a bit. They maintained rate-friendly policies for almost 2 years and then got precipitously unfriendly early in 2022. “Unfriendly,” in this case, refers to hiking the Fed Funds Rate and buying fewer bonds on the open market. The combined effect was one of the sharpest rate spikes in history. Now after more than a year of unfriendliness, the Fed is finally thinking about leveling off and seeing how things play out without too many more rate hikes. They’ve already decreased the pace from 0.75% per meeting to 0.25%. This isn’t a random decision on the part of the Fed. It comes in response to shifts in inflation data as well as other signs that their unfriendly policies are having an effect on the economy. The latest sign is the banking drama that has been in the news this week. It began with Silicon Valley Bank last week but spiraled into a bigger problem with the closure of Signature bank over the weekend. Many people have never heard of these institutions, but they now represent the 2nd and 3rd largest bank failure in US history.

How US banks turmoil is impacting the already hammered housing market – New York Post

How US banks turmoil is impacting the already hammered housing market  New York Post

Mortgage Rates Start Lower, But Then Jump Higher In The Afternoon

Mortgage rates are ideally determined only once per day, several hours into the business day.  This gives mortgage lenders time to observe a baseline for trading levels in the bonds determine what they can charge.  But those bonds trade all day and if things deteriorate enough, lenders can change rates in the middle of the day.  Today was one of those days. The key considerations for bonds/rates at the moment are the fears and risks surrounding the global banking system.  High profile bank failures prompt investors to ask “who’s next?”  A downward sentiment spiral ensues and, left unchecked, can wreak havoc on financial markets.  Regulators and other bankers have learned lessons from past examples of these sorts of panic spirals.  They acted quickly.  The Swiss National Bank provided a lifeline for troubled Credit Suisse and several domestic banks pledged to backstop First Republic’s deposits earlier today. It was the latter, specifically, that led a reversal in financial markets.  Stocks and bond yields moved higher in unison.  Higher bond yields mean higher interest rates.  The average lender is back in line with Tuesday’s levels, or close to them.  That means 30yr fixed rates are moving back into the upper 6% territory for top tier scenarios. If contagion fears continue to subside, there’s more room for rates to rise. If contagion fears flare up again, there’s also some room for rates to move down.  The headline cycle will determine what our adventure looks like between now and next week’s Fed announcement on Wednesday afternoon.