Home > Blogs > Matt Brady > Managing Equity and Markets

Rate Watch - The End Of Tightening

By Matt Brady

Mortgage and Lending with Watermark Capital NMLS #311662

May 08, 2023 07:20 AM

We are coming off an important week and heading into another one. Last week, the Fed raised rates by 25bps, as expected. More importantly, the markets digested Fed Chairman Powell’s words as this may be the last rate hike before they think about pausing. Powell also tried to calm markets by suggesting the banking sector is strong, however, the market thought otherwise as we saw regional bank stocks tank.

I know I sound like a broken record here but I do not think the trouble is over for banks. I think we will see something big break, markets panic, and the Fed step in as the hero. They will inevitably be forced to cut rates to stimulate the economy and reinstate trust in the financial system.

This week, we get CPI numbers. Since the summer of 2022, we have been on a consistent trend lower.

This can also be the first time since 2021 that we get under 5% inflation. As you know, I’m waiting on consecutive month-over-month decreases (not just year over year) before celebrating.

We also get PPI numbers to see inflation on the producer side of things.

Here is what’s in store this week

Monday

Wholesale Inventories
Chicago Fed President Goolsbee TV Interview

Tuesday

Fed Gov Jefferson Speaks
New York Fed President Williams Speaks

Wednesday

CPI Data

Thursday

PPI Data
Initial & Continuing Jobless Claims
Fed Gov Waller Speaks

Friday

Import Price Index
Consumer Sentiment
St Louis Fed President Bullard & Fed Gov Jefferson On Panel On Outlook For Economy & Monetary Policy

Here is a refresher on Fed member positions since we hear from a lot of them this week

Chart Check

We are still trending around the support line. It has been tested and retested many times which leads me to believe that the next move (whichever way it goes) will be a strong one.