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Market UpdatesBlog posted On August 23, 2024
The time has come! Today marks the second-to-last day of the Jackson Hole Symposium, which is a big central banking conference that takes place this time each year. This morning, Federal Reserve Chairman Jerome Powell took the stage for a highly anticipated speech about the current economic state and future Fed outlook. Though Powell is known for his elusive answers during press conferences, he had a straightforward message this morning: “The time has come for policy to adjust.” In other words, it’s time for rates cuts.
When will the Fed cut rates?
Many are taking this to mean that the Fed will make the first rate cut at its September meeting, especially considering that many Fed members were in support of cutting rates on their July 31 meeting. However, Powell emphasized that “the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks." So if key data like jobs reports or inflation come in higher than expected, it’s possible that the rate cut could be pushed until a later Fall meeting.
What this means for mortgage rates
As a reminder: by ‘rate cuts’ we’re referring to the benchmark interest rate, which is set by the Fed. Though the hikes/cuts of this rate can influence mortgage rates, the Fed does not directly set mortgage rates. All that being said, mortgage-backed securities have been responding positively to the news from Powell, which means that mortgage rates are likely to trend lower today.
In other housing news…
We also got news about July’s new and existing home sales these past couple of days. Existing home sales saw their first increase in 5 months, rising 1.3% month-over-month. Meanwhile, new home sales surged over 10% compared to the previous month’s level. This greatly surpasses expectations of a 1% increase, which is likely a result of recent mortgage rate trends.
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Sources: Bloomberg, MarketWatch, MBS Highway, Mortgage News Daily, NAR, NAR
