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the point is investors are deciding when and how much rates are falling not the fed , who hasn’t lowered a thing yet. investors pulled them lower , then backed them up a bit …by the time the fed lowers short term rates , investors will have moved the bond and note rates already
Markets decide to a point, but anytime they deviated significantly from the FED those moves were corrected harshly. When the FED kept rates anchored at 0%, markets followed. When the FED began QT and hiking aggressively, markets were in disbelief initially but later followed. This resulted in a blow-off top at 5% on 10-year yields. Then the FED paused and we saw markets react by plummeting rates (10-year fell from 5% to 3.75% in 2 months), but this move is now correcting. Now we see that the hopium predictions of 6 rate cuts are probably delusional and markets are correcting higher. For now, it appears rates are settling into a range. 10-year between 3.75-4.25%, mortgages between 6-7% is probably the comfort zone for now, or until we get further data and guidance from the FED.
fed verbiage can sway investors more then fed moves .
rates fell from 5% to 4% on the 10 year on fed verbiage not action as the fed hasn’t cut a thing
Both moves- from 4%-5% and 5% to 3.75%- were extreme overreactions by markets. Both moves have corrected already. As noted in my other post, I believe rates are settling into this new range for now.
You have a frozen housing market. So either rates have to come down (even more), or house prices need to drastically correct.
Earlier this morning I saw a brief segment on CNBC presenting new data that housing sale contracts (not yet closed) jumped about 12% compared to a 2% expectation. I'm looking on the web but haven't found a source press release for it. Normally Diana Olick reports on housing related stuff, but not this morning - the segment was presented by Rick Santelli.
Last edited by moguldreamer; 01-26-2024 at 08:40 AM..
no , they haven’t corrected , the 10 year was just over 5% in october, it is 4.15% today .
rates need a 20% rise to get back to the old rate from here. 4.15% to 5.03% is a 20% jump
How do you figure they haven't corrected? A correction is a move of 10-20%. The 10-year fell from 5% to 3.75%. It then rose over 10% from 3.75-3.78% (roughly) to 4.17-4.18 (recent peak). On top of that, the bottom was hit weeks ago and it has consolidated around 4.15%. Clearly, the trend for the time being is higher, not lower, at least short term. Long term we have no idea what will happen.
Seemingly, yes. Something, at some point, has to give.
Neither has to happen. Borrowing rates and housing prices can both remain elevated if not go higher as market participants adjust to the new normal. It is possible for the status quo to continue for some time.
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