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Happy Fed Week! Here’s what we’ve got for you today:

1. Fed “crunch week” off and running | CPI Tuesday 🪩

2. Rate Cut Predictions for ‘24 ✂️

By the way, this article on Steadfast’s Discounted Mortgage Rates is the most clicked link in this newsletter, you should check it out if you are interested.

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Rates Today 📈

Fed “crunch week” off and running | CPI Tuesday

Happy Fed Week!

A “crunch week” for central banks (both US and EU meetings). Traders are attempting to discover when the Fed will step in and begin cutting rates.

Some have predicted the first cut as early as March…but I think it will likely be mid/late Q2 before we see a cut.

The Nov CPI print will roll out tomorrow morning - likely the first indicator of the Feds next step.

As is typical prior to Fed meetings, the market is seeing a slight pullback (20bps).

Expect some volatility tomorrow after CPI is released and more volatility on Wednesday due to the Fed Dot Plot (not so much from the press conference).

Rate Cut Predictions for ‘24 ✂️

The question I always get from agents is this - “When is the Fed cutting and by how much?

Here are some of those predictions from people smarter than me 🙂 :

Goldman Expectations - 2 cuts in late ‘24

Former Boston Fed President & Dryden Pence - only do one or two rate cuts next year

I think it is so easy to get wrapped up in the hype cycle of good news and a social media frenzy. Especially after seeing the popular Business Insider report (that we covered on Monday) saying there could be as many as six cuts next year…

There is a strong possibility that the market is not as favorable as we would like it to be.

But, even 1-2 rate cuts would be helpful to potential buyers - saving them hundreds on their monthly payments.

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My opinion is this - I do not think rates will be cut six times next year. I think we will see about 75-100bps drop through all of 2024.

What that means is this: the opportunity window is right now. Sellers are giving incentives, buyers are still priced out of the market, and as the market falls, more buyers enter the picture.

I do not have a big enough megaphone to get this message out to the world. But I am standing on a mountain shouting to you all - the best time to buy is in this moment.

The pace of the Fed cuts will determine how long this window is open for.

The Cul-de-Sac

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

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— Michael F DiLucchio