Fed Meeting Special - Mortgage rate impacts

The bond market has been called the world’s most efficient economic voter…. in this case, the votes have been cast and the message is clear. The inversion at the long end of the yield curve this week makes the bond market’s expectations all the more clear.


I predict:

  1. The expected significant increase in the Federal Funds target rate this week,

  2. 30-year Mortgage rates heading to the north of 6% in the next 10 days, and,

  3. Significant impacts on Commercial Real Estate, especially given the cap rate is at all-time lows.


In the past 2 days, the 10-year US Treasury is up nearly 40bp. The Fed meets Tuesday and Wednesday, June 14 and 15. These changes are HUGE.

 

In the past 2 days, the one-year US Treasury is up 54bp. The Yield Curve is now INVERTED.

 

Below are mortgage rates since 1990. The recent rise since March is unprecedented.

 

Freddie Mac publishes their Weekly rates on Thursday. THIS IS A SPECIAL ANNOUNCEMENT.


Mortgage rates are 5.46%. My guess is that they will be around 5.85% this Thursday and will EXCEED 6.00% in the following week.



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