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Rate Watch 10/24/2022

By
Mortgage and Lending with Watermark Capital NMLS #311662

There has been a lot of speculation in the markets with regard to what the Fed will do (mostly for them to ease much sooner than expected). I don’t think anyone will doubt the 75 bp rate hike coming in November. The Fed won’t go higher than that next week because that will spook the markets into a panic sell-off.

I see them continuing with the 75-point hike next week but then possibly taking the foot off the accelerator (not to be confused with stopping) in December.

A lot of people are expecting a deep recession next year. I don’t expect a “deep” recession until we are in this current economic position without room to cut rates. As long as the Fed can cut rates and purchase bonds, they should be able to kick the can down the road.

Here is what’s in store this week. We get a look into how the economy is doing with respect to housing data, consumer behavior data, inflation numbers, and a view of Q3 GDP.

Tuesday

  • US Home Price Index
  • Consumer Confidence

Wednesday

  • New Home Sales

Thursday

  • Initial and Continuing Jobless Claims
  • GDP Q3

Friday

  • PCE Price Index
  • Real Disposable Income
  • Real Consumer Spending
  • 5 yr Inflation Expectations
  • Pending Home Sales

Chart Check

Last week I mentioned how there may be a relief rally as we compared the chart pattern to one in the recent past. Monday and Tuesday started off playing out exactly how I hoped. However, it quickly turned negative to end the week. You can see how the markets were more focused on retesting and breaking the lows. 

 
 
 

 

We are in a funny place this week. I can see the markets reacting in contrast to the data. If the economic data is weak, for example, the markets will rally due to the increased likelihood of the Fed needing to step in.

As I've said since August of 2021, I am currently not floating rates. I think we will have a little more pain before things get better. Although we are seeing cracks in the global economy (think Bank of England) in the mainstream media, the Fed won't pivot until a break occurs domestically. 

That's it for this week. As always, please reach out anytime with questions, comments, debatable topics, etc. I'm always here to assist and bounce ideas off of. 

Posted by

Matt Brady

Branch Manager, NMLS ID#311662

(858)342-8659 cell |

matt.brady@watermarkhomeloans.com  
8885 Rio San Diego Dr │ Suite 201  San Diego, CA 92108     

 

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Comments (2)

Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Interesting perspective, the reality is that There is an underlying problem that has been created by the Fed... so when you create the problem you can fix it, is my take, Endre

Oct 24, 2022 10:35 PM
Matt Brady
Watermark Capital - Del Mar, CA
One of San Diego's Best Equity Advisors

I think rates will start coming down as we finish the first quarter of next year and make home purchasing more affordable.

Oct 25, 2022 10:52 AM