Did Fed act too late?

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
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

 

David Goldsmith

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

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
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

 

inonada

Well-known member
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?


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

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

inonada

Well-known member
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

All Powerful Moderator
Staff member
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