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- 🪩 Why the Fed may be done hiking rates | Housing inventory data
🪩 Why the Fed may be done hiking rates | Housing inventory data
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:
Why the Fed may be done hiking rates - according to several Fed Presidents 👩🏻⚖️
Altos Research shows housing inventory levels rising 📽️
By the way, this article on Maximizing Seller Concessions (3-6-9) is the most clicked link in this newsletter, you should check it out if you are interested.
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Why the Fed may be done hiking rates - according to several Fed Presidents 👩🏻⚖️
The Fed’s next policy announcement is coming Nov 1st. Between now and then, the market watches the Fed’s stance through speeches given by regional Fed presidents.
Throughout last week, these presidents gave several speeches that indicated many have shifted their stance on Fed policy and the steps necessary to slow inflation.
Here is a summary of the week:
Dallas Fed President, Lorie Logan, and Fed VP, Philip Jefferson both started the week with mixed comments:
Logan said - the recent run-up in long term rates (this is the 10yr treasury) means less of a need for the Fed to hike again.
Jefferson said - we have to balance the risk of not having tightened enough, against the risk of policy being too restrictive. I will keep in mind that financial conditions are tighter due to higher bond yields.
Following these statements, the Atlanta fed president, Raphael Bostic, said the following:
Inflation has improved considerably, although there’s still more work to do
Our current policy stance is restrictive enough to restore 2% inflation.
Many impacts are yet to be felt (this is the “lag affect” we have discussed on MF Lending)
The San Fransisco Fed President, Mary Daly, reiterated the risk of doing too much. She also called attention to geopolitical uncertainty (Isreal/Hamas) as a risk factor for the global economy.
Boston Fed President, Susan Collins, discussed the following:
The lag between Fed hiking rates and the economy feeling the effects of those rate hikes. (another way to say that the Fed is probably done hiking)
Recent increases in long-term interest rates reinforce the view that we’re very near or perhaps at the peak of the current tightening cycle.
Fed Governor, Christopher Waller, had these thoughts:
Financial markets are tightening and will do some of the work for us. (no need to hike)
Fed can watch and see what happens on rates.
In the last 3 months, inflation has been very good.
Philadelphia President, Patrick Harker, ended the week of speeches with this recap. He said “I believe that we are at a point where we can hold rates where they are. Look, we did a lot, and we did it very fast.”
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This past week’s improvement in rates did not come merely from a “flight to safety” after the Isreal/Hamas turmoil. These speeches and the improved stance from the Fed drove investors to believe there is some light at the end of the tunnel.
In every speech, the presidents offered a caveat that cannot go unnoticed. They all said that they are “data dependent”. The data that will come in before the November meeting will be more important than ever.
Next week, PCE and GDP numbers will come in for September. The Fed needs to see inflation coming down to solidify their stance that their previous rate hikes have done the job. Without the data to support their claims, most will not hesitate to continue hiking as they detailed in their dot plot last month.
As of today, data shows a 95% chance that the Fed holds rates in November and a 66% chance that they hold rates again in December.

Altos Research shows housing inventory levels rising 📽️
Altos Research tracks inventory levels for single-family homes across the US and analyses the data. Here is a great video explaining what is going on in the inventory market and trends to expect moving to the end of the year.
Also provided was a comparison in inventory levels dating back to 2015.


The Cul-de-Sac
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