Did Fed act too late?

[Noah Rosenblatt]

You know my thoughts. The Fed had a great chance last summer to apply the brakes, they chose not to. Now they will have to tighten and raise ffr into a slowing global economy and rising inflationary pressures - no fun

Trio of Former Fed Officials Lament Central Bank’s Actions, See Good Odds of Recession

The Federal Reserve waited too long to take on inflation and its response to it will almost certainly trigger a recession, according to three former central bank officials.

www.wsj.com

 

[David Goldsmith]

The Fed "only" raised rates 50bps and the market rallied. What does that tell you?

 

[Noah Rosenblatt]

The Fed "only" raised rates 50bps and the market rallied. What does that tell you?

Expectation of future depth of hikes was mitigated?

 

[David Goldsmith]

So the Fed didn't raise rates when they needed to and they're not going to in the future either?

 

[Noah Rosenblatt]

So the Fed didn't raise rates when they needed to and they're not going to in the future either?

You say this because of how equities reacted? C'mon now. The Fed is still behind the curve and is yet to begin QT as they claim

 

[David Goldsmith]

No, I say it when the "smart money" (i.e. insiders) bets against it.

 

[Noah Rosenblatt]

Market expectations for a 75bps hike were eased, is pretty much it. Instead of 50 then 75 then 50 -- looks like 50 - 50 - 50 - etc. We likely still end up in the same place. FFR pf 2.25-2.5% by year end? The real kicker is they start selling assets soon, first slowly then gradually increasing, including MBS - so it will be interesting to see how markets react to this - equities and bonds

https://twitter.com/i/web/status/1521946884507672576

 

[Noah Rosenblatt]

This is a good listen on the Fed and fed funds rate etc - https://themacrocompass.substack.co...utm_source=substack&utm_medium=email&s=r#play

 

[Noah Rosenblatt]

wow -

 

[nicolebeauchamp]

This is a good listen on the Fed and fed funds rate etc - https://themacrocompass.substack.co...utm_source=substack&utm_medium=email&s=r#play

Thanks for sharing

 

[Noah Rosenblatt]

Thanks for sharing

ofc! great to hear your voice today Nikki!! hope all is well

 

[David Goldsmith]

It's interesting the mortgage rates pulled back about ?20bps? from their recent high.

 

[inonada]

I think that was just a response to about the same drop in 10-year Treasury yields.

 

[inonada]

From the sounds of this guy, there seems to be an unusual degree of end-of-the-world reaction from 10-year Treasury yields moving up to *gasp* 2.8%. My lord, that’s now even moved positive in real terms (0.2%). Savers being paid a morsel, who coulda ever imagined that as a possibility?

https://www.wsj.com/articles/the-market-is-melting-down-and-people-are-feeling-it-my-stomach-is-churning-all-day-1165310560

Rick Rieder, the head of fixed income at giant asset manager BlackRock Inc., likened the state of financial markets to a Category 5 hurricane. The veteran bond trader has been in the business for three decades and said the rapid price swings are unlike anything he has seen.

"My stomach is churning all day,” he said. “There are so many crosscurrents of uncertainty, and we aren’t going to get closure on any of them for weeks, if not months.”

Investors are used to the Fed stepping in to calm markets, but many of the dynamics rattling stocks, bonds, currencies and commodities are out of the central bank’s control, said Mr. Rieder: “The Fed can’t solve the supply shortage of corn or fertilizers, or the inability to get natural gas into Europe. They can’t build a sufficient inventory of homes.”

 

[David Goldsmith]

It seems like a downward trajectory on rates was short lived?

 

[Noah Rosenblatt]

It seems like a downward trajectory on rates was short lived?

yea - nothing goes in a straight line - these #s are going to give fed room to hike. 50-75bps intra meeting likely coming. 2% FFR is maybe where they need to go. BUCKLE UP!

 

[David Goldsmith]

After recent drops it looks like mortgage rates are back up to about 8 basis points below the recent peak?

 

[inonada]

That sounds about right. Depending on the exact product and index, I’m seeing 0-15bps.

 

[inonada]

It’s an interesting time in RE.

My moms, who is in her early 70s and lives in the SF suburbs, had been considering selling her home in the suburbs and moving to the city for a few years. I had encouraged her to do so last year, for lifestyle reasons, and to take advantage of the city vs suburbs price discrepancy. Unlike me, owning her home is important to her. But she didn’t want to do anything during the pandemic.

Last week, she told me she put her home on the market. In her estimation, the market is topping and then heading down, so now is the time to make a move. She is thinking to sell and rent in SF for a while until this whole thing shakes out.

I’m kinda proud that she’s still in the game w.r.t. working the market. And I also wonder about the other side, who must transact now on prices inflated by low rates that have since disappeared, even though the apparent writing is on the wall w.r.t. prices. This is not a rich person’s home, one where buyers have an infinite amount of money to splash around. The buyer will likely be some well-to-do salaried tech worker(s) grinding it out 5 days a week. They gotta buy now, cannot wait. My 70+ moms, on the other hand, has the drive to still play the game. Despite the fact that her wealth (~100% in home) will outlast her lifetime spending, and that any amount left is insignificant to my brother and me.

 

[David Goldsmith]

I'm still seeing a lot of people claiming mortgage rates are topping out "in the very low 6s."

30-year mortgage rate surges to 6.28%, up from 5.5% just a week ago

The average rate on the popular 30-year fixed mortgage hit 6.28% Tuesday, according to Mortgage News Daily.

www-cnbc-com.cdn.ampproject.org