And according to an analysis of the futures market, not only has the probability of the Fed instituting another rate hike by the end of the year dropped to just over 30 percent but the odds of another hike within the next twelve months just dropped to below 50 percent as well.
Low inflation, good economy, booming housing market. You can only hope it’ll last forever!
Affordability is a major issue for BA now. We need to identify the best city to play “rent here and buy there” movement
I have noticed the rates are coming down since Jan 2017. This is my analysis of likely impact
All mortgage banks (primary are service providers), borrowing money from underwriters (secondary market) and handing it over to buyers. Lenders (primary) are making money between the spread.
This mortgage rate is linked to either 30 year T-Note or 10 year T-note. If mortgage is not going up, this means spread in coming down.
IMO, this is not a good sign for economy as Long_term to Short term spread is getting reduced (Even though this is good for people getting mortgages).
Already FED is working out a plan to windup QE money so that money circulation gets reduced. When QE money is reduced, the rates needs to go up as getting mortgage becomes tougher, then rates likely go up (Supposed to be).
Unless the spread is maintaining or increasing, FED can not raise the rate as it will lead to economic crash. There are plenty of theory/proof provided that economy crashed when we get into a Long term rate is less short term rate situation.
This is proven many times and has higher reliability than any other predictability so far.
This is a challenge to FED, let us wait and see how it goes.
Rate going down because 10-year treasuries are going down. Investors are getting gloomy over American economy. After Trump got elected there was widespread hope there will be infrastructure spending and business-friendly tax reform. They thought US economy will grow at a faster rate and so will inflation.
Now investors realize Trump is all hat no cattle.
Rates are going down because US treasuries still offer a great yield compared to Europe. We are in a WW race to the bottom on rates. People are even starting to float the idea of negative rates. Also, inflation expectations are super low. Even with low unemployment, we aren’t seeing inflation as the fed models predicted. That’s why they are economists and not running hedge funds.
GDP growth accelerated to 3% in Q2. Also, consumer sentiment is at multi year highs. You can’t say people are pessimistic. It simply isn’t true.
Pelosi, Schumer and Feinstein are praising Trump now and they are developing some kind of friendship now. How will leftists treat Feinstein and Pelosi in Califnornia? I heard some people shocked when Feinstein says that Trump could be a good president. Media has made people irrational and many people are waiting anxiously for impeachment. It seems that elite democrats are disagreeing with the radical left and radical media.
Low inflation and good economy seems to be a good combo right now. With the huriccane rebuilding serving as a stimulant, GDP growth should be good for a couple more years