According to an analysis of the futures market, the probability of the Fed hiking the federal funds rate in 2019 had dropped to zero (0) as of last week, as we first reported at the time (and foreshadowed earlier this year).
And according to the latest survey of Fed officials, a majority of the seventeen now deem foregoing any additional interest rate hikes in 2019 to “be best” for our economy, with global economic risk factors having increased since the beginning of the year.
And in fact, the probability of an easing in 2019 has now jumped to 33 percent according to the aforementioned futures market.
Wow, I guess we are now adddicted to free money.
Just shows how home/stock owners are basically another welfare recipient class due to FED policies. Lots of unearned wealth inequality the past decade due to QE programs.
Essentially Universal Basic Income for the top 10%
“Progressive” economics are as ridiculous as conservative environmental policies. Investing, paying taxes and paying your mortgage is not un-earned.
Not all homeowners. While QE certainly benefits the holders of stock whom are overwhelmingly wealthy, the lower and middle income families actually have a much higher percentage of their net worth tied up in the housing market, and some lower-end housing markets have barely climed back to pre-bust levels. At the end of the day, the central bank is trying to keep markets propped up for the benefit of its member banks, first and foremost.
Question about these “lower and middle income families” who have a relatively “higher percentage of their net worth tied up in the housing”: do they have mortgages? If the answer is “yes”, then they too have benefited from The Fed’s QE programs, even if they hold no stock.
When The Fed goes out in the open market and buys mortgage-backed securities, that drives interest rates down for both purchases and refinancing lower than they otherwise would be all else being equal. With the money that these lower and middle income families are not sending into a mortgage servicer every month, they are either saving it or spending it on other things they derive positive utility from. So mortgage-borrowing homeowners are benefiting.
Maybe you’re thinking of people who have their net worth tied up in a home and own it free and clear. Those people aren’t benefiting as much.
Heck ya….I have a 5/1 ARM at 2.75% coming up next year…..figured it’d go up at least 100bps…but now I am not so sure….especially if (when) the economy tanks and they take rates down. It would be amazing to lock in another 2.75% term, but even if its a good bit higher all the signs I am seeing now say it wont be much.
Eventually we’ll have a little recession and it’ll be time to buy buy buy discounted assets. Mostly I am thinking stocks, but all these nice new towers in DTO will be sprouting a bunch of condos right around when the softness will really be kicking in so maybe I’ll pick up an Oakland condo to rent out.
Plan for the dip….
Keep in mind that short-term rates haven’t dropped as much as the 30-year. And in fact, the inverted spread between 15-year fixed (3.71%) and 5-year adjustable (3.84%) rates is now up to 13 bps.