Morning! This is MF Lending - the fool-proof way to serve up mortgage and real estate market knowledge without any of the guesswork. So you’ll look like the smartest agent in the room (and you are!)

Here’s what we’ve got for you today:

1. CPI Report Improves Interest Rates Drastically 💥

2. June Fed Meeting: JPow Comments and Rate Projections 🧮

3. Clips From June Meeting 🎥

By the way, this article on Onward Real Estate is the most clicked link in this newsletter, you should check it out if you are interested.

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Rates Today 📉

CPI Report Improves Interest Rates Drastically 💥

If you follow MF Lending’s daily Instagram stories - you knew this report was coming and would impact the market greatly.

CPI came in below forecasts at .2% m/m and 3.3% y/y - this is great news for mortgage rates.

At market open 6/15, the bond market ripped up over 50bps - improving rates back to the high 6% range.

Matt Graham, from MBS Live, wrote a great piece titled "Super Strong Start after ‘Perfert’ CPI Print” that is worth a read -

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Following this economic news, PPI (Producers price index) was released this morning 6/13. This report also came in low, again great news for rates. The bond market is up again 25 bps.

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If the trend we are seeing in the data continues, we are setting up nicely for the first rate cut by the end of the year

June Fed Meeting: JPow Dance and Rate Projections 🧮

As expected, the Fed held interest rates steady yesterday.

Other than the Dot Plot, it was an uneventful meeting. Pappa JPow gave the same song and dance about being data dependent, that they are fighting to bring inflation down, and being cautious to cut interest rates too soon.

All eyes were instead on the infamous “Dot Plot” which is the Fed’s way of offering their interest rate projections for 2024 - 2026. This chart was the reason behind the “three cuts in 2024” narrative at the start January.

There is strong aggrement that we will likely see only 1 rate cut in 2024. 

However, this will be highly dependent on the next economic prints (CPI) we will get prior to the September meeting.

The median projection by the end of the year showed the Fed Funds rate at 5.25-5.0 which would be a 25bps drop from where we are today (1 cut).

Some of the governers are more bullish, thinking we still have room for 2 cuts (one in Sep, one in Dec).

The 2025 projections show Fed Funds rate averaging at 4.25-4.0. If this held true, that would mean about 4-5 cuts in 2025.

Here is a full snapshot from the Dot Plot:

The CME Group, who projects the Fed rate decisions, currently shows the likelihood of a cut in September at 61%. Of course, this is subject to change.

Other projections from CME Group:

• First cut by Nov meeting - 80%

• First cut by Dec meeting - 95% | 2 cuts by Dec - 67%

This group is definitely more bullish than the Fed governers.

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The next time we will see the Fed is July 31st. By then, we will have the July CPI print will be highly impactful on the Fed’s decision. Keep reading MF Lending for updates as we go. 😎🪩

Clips From June Meeting 🎥

• The market is much more confident that we will have a cut in December - will likely be “one and done”

• “Takes the “bad tail” out of the meeting” - meaning there was a high floor for the meeting, we were coming off of such great news, it was hard for the Fed to take the wind out of the market’s sails.

Thanks for reading - that is all we have for today 😎

Please forward this to your friends and colleagues if you found it valuable.

— Michael F DiLucchio