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2016-06-15 12:42:35
Interest Rate Decision Coming - as Provided by Ale

The FOMC (Fed Open Market Committee) concludes their 2-day meeting Wed.  The big news on tap is any insight we might gain to future rate hikes.  The market currently has this pegged at only a 2% chance of occurring now.  The interesting subject will be what commentary is released about future plans.  Previously, the plan was for at least two hikes in 2016.  With the recent poor May jobs report and other sluggish economic indicators, it is anyone’s guess what might happen as we head into the second half of 2016.  Yes, it’s half over, I thought we just started…


Probably the biggest market mover right now is the developing situation with “Brexit”, or the British exit from the European Union.  Previously, there was little concern about this, but polling done last Fri., and confirmed this morning reveals the majority of Brits are in favor of this.  If it occurs, it will create uncertainty in the world financial markets and will impact our economy.  We’ll likely see this strengthening our dollar which becomes deflationary as the products we import will be purchased at cheaper prices.  Stocks would likely be hurt and bonds would likely benefit as investors move funds to the safer heaven of bonds.  Watch for coming news as the June 23rd vote for this approaches.


Please remember that the Fed controls the Federal Funds Rate and not mortgage interest rates or other rates.  Obviously, the Fed moves impact the entire economy, but it is an interesting dynamic of Fed “monkeying” with the Fed Funds Rate and how mortgage rates respond.  The first Fed hike in 9.5 years (last Dec. 16) caused mortgage rates to decline.  We’ve had lower mtg. rates since.  Despite the fact that the Fed has made no changes in the Fed Funds Rate since Dec., we’ve seen some wild swings in mtg. rate this year.  This is demonstration of how mtg. rates, like all financial vehicles, are a result of “trading” which is impacted by economic conditions and, yes, gambling.


The reaction of mtg. rates to future Fed hikes will depend on the timing of Fed hikes and many other variables.


Should you have any questions, please feel free to email us and we'll look forward to assist you!

Blog Archive
2016-06-22 11:59:48
Vote on Brixit is Thursday - Details Provided by A

2016-06-15 12:42:35
Interest Rate Decision Coming - as Provided by Ale

2016-05-17 11:43:55
Best Neighborhood for Your Family

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