Fed Rate Hike Likely Today-12/19/2018

The Federal Reserve is expected to announce that they will raise the rate at which they lend to banks from 2.25% to 2.5%.  There is a lot of politically charged talk about the move, but the Fed has been consistent with making their decisions based on market data.  The unemployment rate is at a low 3.7%, a key marker that our economy is healthy.  Not everyone is happy about the decision to raise rates:

• ·         President Trump says the move is based on meaningless numbers and that the Fed should “feel the market”.   In Great Britain there would be a pause and they’d say, “Right then, in Zimbabwe today…”.

·         Bruce Bittles of Baird says, "First, I'm concerned that if the Fed does not raise rates, they look to be bending top political will," and added. "And no. 2, they'd be admitting that economy doesn't look too great."

Not everyone is upset with the Fed’s moves – the stock market jumped up 50 points today on the anticipated announcement.

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Breaking News: Federal Reserve Assessment

The Federal Reserve upgraded its assessment of the U.S. economy today, but decided to skip another interest rate increase for now.

In a widely expected move, the central bank's policymaking Federal Open Market Committee voted unanimously to keep the target range for its benchmark rate at 1.75 percent to 2 percent.

However, the committee is widely expected to approve an increase at the September meeting, and a tweak in the language from the post-meeting statement could be a nod toward more monetary policy normalization.

The statement said the labor market has "continued to strengthen," language consistent with the June meeting.

The Great Unwind Begins

The Federal Reserve has announced that they will start to unload their massive $4.5 trillion balance sheet of bonds.  The Fed began buying bonds in 2009 to ease the mortgage crash.  What does this mean to the everyday consumer? Higher rates across the board. We will see rates go up from credit cards, to car loan, to home equity lines and of course mortgage rates.  Check out the article HERE.  Looking to buy or refinance? Now may be the time to do it as opposed to waiting until next year.  Call the Easterbrook Team at (916) 850-6050 or email us at easterbrookteam@spmc.com. 

4th Straight Day Without Bad News For Mortgage Rates

Mortgage rates improved moderately today, making this the 4th straight business day without any new weakness (aka “higher rates”). It’s necessary to include “days that haven’t been bad” in that tally because two of them merely saw rates hold flat. That’s about as much of a victory as we have been able to hope for ever since Septembers abrupt little rate spike began just over 2 weeks ago.


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