The FED

Podcasts of billionaires and multi-millionaires.

:smiling_imp:

Need to ask? Obvious is 0.75% regardless of CPI and other macro figures. 0.75% bring fed rate to 2.5% which is the neutral rate for 2% inflation. Is a must to hit as quickly as possible. Play by ear after that, may be pause, may be more hikes, it depends. Ideal is pause + QT.

Just this week two fed members said they support 0.75% at the next meeting.

1 Like

Did Powell overdoing it? Market has Fed fear fatigue. Too much fear becomes no fear.



Sep 8 CATO
https://www.cnn.com/2022/09/08/economy/powell-monetary-policy-cato/index.html

“We need to act right now — forthrightly, strongly.”

Aug 26 Jackson Hole
https://www.bloomberg.com/news/articles/2022-08-26/read-fed-chair-jerome-powell-s-speech-at-jackson-hole-symposium#xj4y7vzkg

We are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply, and to keep inflation expectations anchored. We will keep at it until we are confident the job is done.

Jul 27 FOMC

“While another unusually large increase could be appropriate at our next meeting that is a decision that will depend on the data we get between now and then,” Fed Chair Jerome Powell said.

1 Like

There are rumbling that Fed might update terminal Fed rate from 4.5% to 6% during Sep Mtg Sep 20-21. If true, I have to eat crow since this would cause stock market to break below Jun 16 low.

2 Likes

Nope below 2018 levels. Terminal rare if 6% was 2 decades ago.

1 Like

Yes, zero other variables have changed and everything happening is in a vacuum. Lol.

I voted for 0.75% :grinning: Surprised to see 32% expect higher than 0.75%

Raised 0.75% as expected.

Market red?

Along with the massive rate increases, Fed officials signaled the intention of continuing to hike until the funds level hits a “terminal rate,” or end point of 4.6% in 2023.

Good. No change in terminal rate.

The “dot plot” of individual members’ expectations doesn’t point to rate cuts until 2024; Fed Chairman Jerome Powell and his colleagues have emphasized in recent weeks the unlikelihood that rate cuts will happen next year, as the market had been pricing.

Guess market is not happy with no rate cut remark.

1 Like

Until 12:30 PM PST (until FED conference) over, market will be volatile, then stabilized the direction. In 6 mins, Powell starts his conference.

See live here

1 Like

Watching. For the first time :face_with_peeking_eye:

1 Like

That is it !
Now, you do not need to read any news/media for rates, inflation or any other things !
If news/media writes the details biased, you will immediately notice the issue !!

2 Likes

Hi experts,
With fed signaling rates could reach 4.6 before slowing down, what will be the average expected 30-year home mortgage rate by then.
I know there is no direct correlation between Fed rates and 30-year mortgage i am looking for some estimated number.

Thanks

You have some mark up (2%-2.25% range) over this rate, appx it may be 6.75%-7% range. All guess work.

3 Likes

That’s about the right spread from a historical perspective.

2 Likes

If Fed also continues to sell MBS it’ll add another percentage point to the mortgage rates. So expect around 7.5 - 8% rates.

Not really.

If one lender sells the mortgage packages to another lender, there won’t be any change is rate. This is very common transfer issue between one secondary lender to another secondary lender.

It is just MBS rate auction that determines the rate, mainly by supply and demand.

If FED successful in selling the MBS, it is a good sign market is having sufficient liquidity of MBS.

1 Like

Exactly. Plus, the fed isn’t selling MBS. They simply aren’t buying more when existing bonds reach maturity. The Fannie/Freddie auctions are the indicator of where mortgage rates are going. The federal government still guarantees them through Freddie/Fannie, so the rate should move much due to the fed not redeploying capital from maturing bonds.

1 Like