Weekly Rate Watch 7/24/2022

By
Mortgage and Lending with Finance Of America NMLS #311662

It’s time for another Weekly Rate Watch where my goal is to help provide value to you and your clients when it comes time to talk rates. Should you ever have any questions at all, please do not hesitate in reaching out. I’m always here to help. Let’s begin!

 

We have the biggest week YTD coming up, economically speaking. The two events that will capture headlines are the Fed’s monetary policy decision along with Q2 GDP numbers.

 

The Fed was expected to raise rates by 50bp. That number has increased to 75bp which is current market expectations. However, coming off the back of 9.1% inflationary data, and with the Fed not meeting on policy next month, a 100bp increase is not out of the question.

 

Q2 GDP data is released this week. There are a number of different metrics that different economists use to see whether an economy is in recession, but one of the most widely held is having two consecutive quarters of negative growth/GDP. Q1 came in at a negative 1.4% which was later revised to a negative1.6%. As mentioned before, I expect Q2 to be negative as well.

 

If the recession story captures headlines and replaces the inflation story, we can see a shift in monetary policy from the Fed as soon as September when they meet again. Many will point to the low unemployment rate as proof that we’re not in recession, but we poked some holes in that last week.

 

Here is what is in store this week.

 

Tuesday

 

  • Home Price Index (year over year)
  • Consumer Confidence Index
  • New Home Sales

 

Wednesday

 

  • Fed Monetary Policy Decision
  • Fed Chairman Powell Speaks

 

Thursday

 

  • Q2 GDP Data
  • Initial and Continuing Jobless Claims

 

Friday

 

  • PCE Inflation Data

 

Something to note (and of course can be different this time) - In the past, the Monday and Tuesday leading up to the Fed decision have been bad days for rates. Then, rates have gotten better after the Fed announces its policy changes and Chairman Powell speaks dovishly. Rates then were volatile, usually to the negative side, to finish the week.

 

It will be interesting to see if the same pattern holds up this week.

 

Chart Check(see above)

 

The trend is down. Nothing new to report here. Even when we are bouncing back, they are lower highs, indicating we have further room to drop. Everything can change on a dime, and will, once the Fed starts easing on the rate hikes. That will occur with lower inflation data or high recession data (we will enter a phase where the markets cheer bad data because that means the Fed will be forced to cut rates).

 

 

My long-term thesis has not changed. The Fed will be forced to cut rates. Whether it is in September, end of the year, or next is anyone’s short-term guess. The big picture, however, is one that will require lower rates.

 

Click HERE to stay current with the Fed’s meetings this year. You can also view the statements and minutes from previous meetings.

Posted by

Matt Brady

Builder Sales Manager, NMLS ID#311662

(858)342-8659 cell |844-268-1952 fax

mabrady@financeofamerica.comfamadvisor.com/matthewbrady   
8885 Rio San Diego Dr │ Suite 201  San Diego, CA 92108     

 

BIA SanDiego 19 year Member and P2 Sponsor

 

BIA SMCBoard Member since 2012

 

 

 

 

Comments (3)

Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Jul 25, 2022 02:54 AM
Matt Brady

Thanks Richard Weeks here is hoping we see an improvement this fall.

Jul 25, 2022 02:01 PM
Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

This is an excellent post with great information. Thanks for sharing it.

Have a super fantastic week!
Joe Jackson, Realtor-KWCP

Jul 25, 2022 05:19 AM
Matt Brady

Thank you Joe Jackson. I hope you have a suoer fantastic week as well!

Jul 25, 2022 02:06 PM
Ray Henson
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA
Realtor

It is too bad the Fed did't take smaller steps when inflation went over 2% or so, like they were supposed to.  Now, I fear they will overreact. 

Jul 25, 2022 07:34 AM
Matt Brady

Hi Ray Henson, don't you remember "this is transitory, nothing to worry about". Oops

Jul 25, 2022 02:08 PM