It’s Fed Day – So Far So Good

Filed under: Market Comentary

Today is Fed Day, and it’s been a doozy! Last Friday, the CPI number came in higher than expected, so there’s been a lot going on in the market. We’ve seen mortgage rates up by 3/4 of a percent! It hasn’t been great.

The market has been saying: get this inflation under control. As long as inflation is a problem, rates only have one way to go: up! Many economists have been saying that the Fed needs to raise rates by at least .75 to a full point to manage inflation.

So here we are on Fed Day. They did indeed raise by .75 of a point, which is the highest single raise by the Fed since 1994 – which says a lot about the situation that we’re in. It also signaled to the markets that the Fed is getting engaged here… and willing to go off-script to do what needs to done to turn inflation around.

The Market’s Response

The market really liked this announcement and responded well. Remember that the Fed increases the Fed fund rates (not mortgage rates), and then the market reacts to this change. The bond market (long-term mortgage bonds) really liked it today. It was nice to see.

Because of this change, there were a lot of people buying mortgage-backed securities. It was one of the biggest positive moves we’ve seen in a while. Today’s improvements basically wiped away the mess that happened in the market on Monday (which was a pretty rough day).

What Will Happen in the Future?

We’ll see what happens going forward. The one thing we keep hearing is that we are not yet at peak inflation. There is more to come, unfortunately.

As a result, the upcoming rates are almost guaranteed to run up for the next few months. We’ll see inflation running high for a bit, then the math starts to become more favorable and we are hoping that we’ll see flattening at that point.

For today, the Fed engaged in a bigger way than we were expecting, and that’s good for mortgage rates – we’re finally seeing some green in these rates!

If you have questions or need more info, reach out to me for more info. I’m here to help!

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