Press "Enter" to skip to content

Fed Says: Don't Get Too Excited About Rates Just Yet

There’s no question that last week was an exciting one for rates. On Wednesday, the average 30yr fixed was fairly close to the highest levels since 2002. The following afternoon, it had fallen more than half a percent to the lowest level in nearly 2 months–the biggest single day drop on record.   While rates are still very high relative to anything but the past 8 weeks, it was a promising step in the right direction.  It raised hopes for a bigger picture shift after the fastest rate spike in 40 years.   As the new week got underway, rates managed to hold onto their newfound gains relatively well and with minimal volatility on average.  Things may have been better were it not for a concerted effort on the part of the Fed to remind the market not to get too excited about additional declines. Why is the Fed trying to rain on our parade? First, let’s examine what was said by various Fed speakers.  Here are a few examples (paraphrased):
Waller: Thursday’s CPI report was just one data point.  Markets are “way out in front.”
Harker: Inflation will take time to come down.  I don’t like to base policy on a couple of headline numbers
George: It would make sense to slow the pace of rate hikes next year
Daly: Inflation data is good news, but “pausing” is not being discussed
Waller: Inflation data makes a case for a 0.5% increase instead of 0.75%
Collins: Fed has more work to do, needs to hike rates more
Bullard: Fed needs to hike to at least 5%, even if inflation data remains friendly
Kashkari: Some evidence of inflation plateau, but can’t be persuaded by 1 month of data.  Hikes will continue into 2023
Source: mortgagenewsdaily.comNew feed

Be First to Comment

    Leave a Reply