How Now J. Powell?
Never one to disappoint, the star of the Federal Reserve, Mr. Jerome Powell left his Darth Vader mask at home but his presence once again brought the stock market to its knees. Nothing quite so dramatic as to upstage Netflix 28% drop, on an earnings report showing a loss of 200,000 subscribers. First yearly loss ever. Perhaps continuing to raise prices while competition hit a factor of about 10 wasn’t the best strategy.
But you’re not here to lament over Moderna’s 22% hit, you want to know about mortgages. With an 8.54% y/y inflation in March, up from Aprils 7.87%, no dove to be had today. We were told inflation is a global problem and the Fed’s goal is to get inflation down without causing a recession. The 5 Year Treasury crossed the 10 Year again today. I’m not holding my breath. He went further saying we were feeling the upward pressure of inflation and the issues of the war in Ukraine, but continued with the US economy is strong and the labor market is tight.
From there he stated that it was appropriate to move more quickly, however he would not commit to the next rate hike amount but insinuated at least a .5% hike in May, with a total goal to raise it 3.25% by year end. No details were given on the bond sale issue.
Rates are only going one way folks. We still track daily rates (click HERE to be added to the update list), and they do go up and down slightly depending on news of the day, but the trend is higher across the board. Rates are up almost 2% over January and the Fed has only had one .25% rate hike so far.
Buy those properties soon or get your refi’s locked fast if numbers still work for you. If you are in an adjustable, check the cap. We are a bit under 5% for a 30 year conventional with today’s Fed money cost. If the banking industry just follows along we could be in the high 7s, low to mid 8s at year end.