Looks like the Fed raised the estimate for economic growth and will cut rates this year into the 4’s. Good news for an incumbent. Bad news if you want the sky to fall. Fed meeting today: Interest rates hold steady with 3 cuts seen in '24 WASHINGTON--The Federal Reserve left its key interest rate unchanged again Wednesday and stuck to its forecast of three rate cuts this year despite signs that inflation may stay elevated longer. Fed officials also bumped up their estimates of economic growth and inflation in 2024. The decision leaves the Fed’s benchmark short-term rate at a 23-year high of 5.25% to 5.5% for a fifth straight meeting. After hiking the rate from near zero since March 2022 to wrestle down high inflation, the central bank has stood pat since July as consumer price increases moderated substantially. Fed officials also bumped up their estimates of economic growth and inflation in 2024. While inflation has eased more slowly early this year, Fed officials maintained their projection that they’ll lower the federal funds rate by three-quarters of a percentage point to a range of 4.5% to 4.75% by year’s end, according to their median estimate. That’s equivalent to three quarter-point rate cuts, an outlook that could further bolster a stock market that has hit new records since fall on the prospect of lower rates.
Chances are it will keep pushing the market. Inflation has still been sticky a the employment market is still strong. It will be interesting to see when they cut as the numbers they say they are watching aren’t really where they hoped when they went neutral and started talking about “normalizing” rates. 3 cuts would usually mean June Sept Dec, seems a bit aggressive based on their recent history.
I’ll be shocked if they cut in May, that’s only 2 months away and the data has been pretty slow to move as of late in a rate cutting direction.
I almost bought some spx calls today. But with news coming they were way too pricy from volatility to play the game. Wish I had. That said it was a good day for my CCL calls.
Rates seem fine where they are for now. This gives the fed some ammo if they have to actually address a downturn/recession. Very close to their 50 year avg.
The market liked the news. It’s up. Our economy is still adjusting from the effects of covid. I like where it’s going except for a few items that seem still a little too high in price. It’s better than I thought it would be a year ago.
Fed should’ve slowly raised rates back in the 20-teens after we got out of the Great Recession. We’ve had abnormally low interest rates dating back to 2001.
raise the rates and the interest costs to the munis and to the fed becomes too much. they (gubmnt) were keeping rates low so they can borrow cheaply and continue to live beyond their means.
Actually, very bad news for Biden if they don't cut this summer and not great he didn't get a March cut. Fed is waiting too late to react again. Like they do 100% of the time. Waited way too late to raise and will wait too late to cut. Although hard to blame them here as they can't get it wrong, old data is their undoing. There will be no robust economy talk this fall. Owner of Circle K stores reports steep profit drop, blames ‘headwinds, especially in US’ (msn.com)
Possible. But honestly they guided the economy out of Covid pretty well all things considered and I’ve been very critical of the Fed. I definitely believe a cut is in order and they are waiting too long. I see signs of economic slow downs but so far there is enough going up to offset the downs… but again, they haven’t mucked it up yet.
They also spent a ton on acquiring new stores. That kind of capital outlay will take a chunk out of current profits.
Sales per store was down significantly. 7-11 down worse. These are everyday joes who are buying less energy drinks, candy bars, and smokes. i'm certainly not saying the sky is falling. But these are the kind of stats/signs the Fed reads and reacts to six months later. Anecdotally, I know a lot of commercial developments that have been tabled/shelved in the last six months. It's already starting to trickle down to the workforce.
Florida panhandle. But when rates go from 4.25 to 8.25 during design process, underwriting becomes a lot harder. I'm sure it's common everywhere.
Housing, food, energy just keep going up. Not sure how to slow it down other than demand reduction and I don’t see that happening for any of those core costs. Three this year would surprise me.
Not to mention construction costs go up 45 - 60%. I see it, market is still there in SW Fl as the people just keep coming.
Might be a stupid question but these rate cuts into the 4's will only be for 10 year fixed? So potentially 6% on 30 years?
3 rate cuts will probably get the 30 year mortgage to 6%. And probably a 100 basis points in 2025. If we end up with mortgages in the mid fours to 5’s that a good place. We had free money for far too long. Capital will be directed to better investments and we managed just fine in the late 90’s and early 2000’s at that level.
