Shock The Monkey (or the Market)
This week’s “pop” hit is the 1982 hit “Shock The Monkey” by Peter Gabriel. The song describes being shocked by a sudden jolt of electricity, or in our case… totally unexpected economic news. Here is what has happened over the past several weeks:
- Fed cut rates and mortgage rates RISE by .50% to 6.62% on a national average.
- 10-year treasury hit the highest point since the beginning of August.
- Unemployment rate fell from 4.2% to 4.1%.
- Non-Farm Payrolls rose to over 240,000 for September when the market expected only 140,000.
- Prices at the pump are the lowest since the beginning of the year.
So, what will the FED do next? If you believe the employment data that was released, then the FED may not cut rates again, or maybe not as much as we expected after they made their last cut. Thursday’s consumer price index will be very interesting to watch. The market is expecting the headline number to fall to 2.3%, which is closer to their target number of 2%. If we get a number at or below this 2.3% expectation, I am looking for mortgage rates to head back down again, reversing what has been a 3-week move to notably higher mortgage rates. Funny, the “talking heads” on the cable “news” networks have not reported this information, and if they have, it was a brief comment from one of their so-called “real-estate experts”. But they were the first to say that mortgage rates were nose-diving after the FED cut, which we all know did not happen, and mortgage rates have steadily risen to their current levels above 6.5% since the FED cut. As I have said before, why let the truth get in the way of a good story?
I am not trying to be so “negative,” but I will say that some of the economic releases have been… well… let’s just say “interesting.” The employment number was certainly a shock, but so has been the massive fall in gas prices at the pump over the past 30 days. Then, let’s throw in the inflation numbers being released tomorrow, and let’s top it all off with an election that will now take place in less than 30 days. I still think the FED will cut rates again in November by .25% to .50%, and mortgages should slide back towards the 6.25% range by mid to late November. Hold on to your hats… this is going to be a wild ride for the next 30+ days.
Remember… the BEST RATE… IS A LOCKED RATE… with a float down… ask me about our program that allows you to lock your rate and then float down if rates move lower.
Make sure you (or your buyer) get pre-approved before looking at homes so we can determine if you are looking in the correct price range and have you armed to submit an offer with a pre-approval letter!
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Blog post date: Thursday, October 10, 2024
