The latest update on mortgage and interest rates is here. The Fed’s hawkish tones were replaced with more “dovish” sentiments, inflation continues to fall and interest rates may have already hit their peak. Read on to see how our partners at New American Funding answer the most pressing questions.
Top Takeaways
● Inflation continues to fall and should maintain this downward trend.
● Unemployment has inched up slightly, up 3.9% from 3.8%.
● The 10-year is now down to 4.53% after reaching 5.00% just a few weeks ago.
● The market is seeing good signs that interest rates may have already hit their peak.
● A temporary halt in interest rate increases may be in sight.
What’s happening with rates and what kind of activity are we seeing from the Federal Reserve?
On Wednesday, November 5th, we had the Federal Reserve meeting where, not only did they leave rates unchanged, but instead of leaving a hawkish tone, they left the market feeling very dovish. Jerome Powell stated that “the full impact of higher rates hasn’t worked its way into the economy.”
What kind of impact do these actions have on inflation?
As mentioned in prior updates, inflation continues to fall and if you add Mr. Powell’s statement to that, it means that even if the Fed does nothing from here, inflation should continue to come down.
Is this what we expected? And what will this do to market yields?
This is exactly the market’s interpretation and we saw yields coming down very quickly as a result. The 10-year is now down to 4.53% after reaching as high as 5.00% just a couple of weeks ago.
Has the unemployment rate or the job market seen any change through all of this?
Since the November 5th meeting, we saw updates to the non-farm payrolls and the unemployment rate. Payrolls added in October were a steep drop from September and came in below the market’s expectation. Additionally, not only did the unemployment rate inch up to 3.9%, but wage inflation also dropped slightly.
What can we expect to see in the foreseeable future?
All these events will continue to put downward pressure on rates as market sentiment is beginning to change towards a more dovish Fed. We still have to be very careful of an unexpected rise in inflation or a surprise jobs report, but at least as of today, the market is seeing very good signs that interest rates may have already hit their peak.