All articles tagged with #fed policy
A long-running housing shortage and prices that rose earlier this decade, combined with mortgage rates approaching 7% after recent Fed hikes, are constraining buyers’ purchasing power and pressuring sellers. The higher borrowing costs could slow home sales and new construction this year, though the exact path remains uncertain as the bond market and lenders respond to policy signals.
A data-powered forecast links mortgage-rate movements to 10-year Treasury yields and an estimated spread, blending Deloitte’s five-year yield projections with Claude AI’s base-case spread. In the base case, five-year outlooks place 30-year mortgage rates around 6.20% in 2027, easing to about 5.90% by 2031. Bull and bear scenarios show wider possibilities: a soft-landing path could push rates toward roughly 5.05% by 2031, while a bear scenario could see rates topping 7% in 2027–28 and only drift down to around 6.9% by 2031. The analysis notes the historical Treasuries–mortgage rate spread (roughly 2.0 percentage points, potentially narrowing to about 1.75–1.90 pp) and cautions that outcomes depend on inflation, Fed policy, oil prices, and geopolitical shocks.
Analysts expect the Fed to hike rates at the upcoming FOMC meeting, potentially lifting the funds rate to 3.75% and signaling a hawkish stance. The article warns this could pressure the S&P 500 in the near term, driven by two opposing forces: (a) free-cash-flow and margin concerns for mega-cap tech as higher rates increase discounting and capex intensity, and (b) valuation multiple compression in software and growth names. It also notes that any shift in communication—such as ditching forward guidance or altering the dot plot—could unsettle markets further. The piece positions a disciplined, high-quality stock portfolio as an anchor amid macro uncertainty and frames the rate decision as a potential turning point for equities into late 2026.
U.S. retail sales rose 1.2% in August, led by nonstore retailers and services, with core retail ex-autos, gas, building materials and food up 1.4%—the strongest gain since Sept. 2024—boosting Q3 GDP forecasts to about 3.0%–3.5%. Inflation signals remained mixed as import prices climbed 0.7% and were up 7.0% year-over-year, even as gasoline costs rose and real wages cooled. The report follows a Fed rate hike to 3.75%–4.00% with guidance for additional increases, underscoring resilient consumer spending amid inflation headwinds.
U.S. Treasury yields rose across the curve, with the 10-year yield topping 5% again on hawkish Fed signals after the rate hike to 3.75%-4.00% and a SEP/dot plot indicating more hikes this year; the 10-year hovered around 5.01%, the 2-year at about 4.72%, and the 30-year near 5.35%. Brent crude stayed above $113 amid Middle East supply concerns, while soft regional data and the Fed’s inflation projections suggested a higher-for-longer path and a core PCE return pushed to 2029.
U.S. Treasury yields moved higher, with the 10-year yield near 5.025%, its highest level since 2007, as traders increasingly price in a 25-basis-point Fed rate hike at the upcoming meeting. The 30-year yield rose above 5.38% and the 2-year yield climbed to about 4.68%, with inflation remaining above the Fed’s 2% target and oil prices reinforcing inflation expectations. Analysts note a tight correlation between oil and Treasuries, suggesting further pressure on yields if crude stays firm as markets await the Fed decision.
Stock futures fell Sunday night as AI IPO optimism waned after OpenAI said it won’t go public this year and Anthropic urged slower AI development amid safety concerns; oil rose more than 2% following Saudi Arabia’s pipeline shutdown, pressuring markets ahead of a Fed policy meeting where a rate hike is seen as likely. Last week saw declines for the Dow, S&P 500, and Nasdaq, with lawmakers weighing stronger AI safeguards amid the AI debate.
Friday's August CPI release will be the last inflation datapoint before the Fed's decision next week. Expectations call for a 0.4% monthly CPI rise (3.4% year over year) and a 0.2% core increase (2.4% y/y). Thursday's PPI data boosted odds of a 25 basis-point hike to around 73%, though a surprise to the upside or downside could sway the decision; investors will also watch how the CPI feeds into the PCE index due later in September, which the Fed uses for its inflation gauge.
Oil rose above $100 a barrel, pushing U.S. Treasury yields to multiyear highs with the 10-year at about 4.908%, the 2-year at 4.518%, and the 30-year near 5.332%. The move comes as inflation fears mount ahead of Friday’s consumer price data and next week’s Federal Reserve meeting, despite a tame wholesale inflation report showing prices up 0.4% in August and core up 0.2%.
With Iran’s nuclear talks stalled, U.S. forces strike three Iranian oil carriers after missiles target American ships, signaling a widening conflict; peace envoys Kushner and Witkoff travel to Moscow and Kyiv amid Ukraine pressures, while diesel hits a record high in the U.S. and oil prices stay elevated. Central bankers face scrutiny ahead of the Sept. 15 Fed meeting, as inflation concerns persist, and the day’s headlines are further flavored by LeBron James teasing a Polymarket partnership.
August’s payrolls rose by 162,000, beating estimates of 55,000 and marking the strongest August upside since 1998, but most of the gain came from restaurants/bars (59,000) and local-government education (42,000), which together account for about 62% of the total—leaving roughly 61,000 for the rest of the economy. Bloomberg Economics attributes much of the surprise to an unusually mild seasonal adjustment linked to World Cup disruptions in leisure/hospitality. May and July revisions were higher, unemployment held at 4.1%, and participation rose, suggesting the summer slowdown wasn’t as severe as headlines suggested. Wage growth cooled a bit while hours rose, indicating the hiring burst was skewed toward lower-wage roles and that the inflation outlook—and Fed policy—remains the key question.
Forecasts point to an 53,000 gain in August nonfarm payrolls, keeping the unemployment rate at 4.1% after June–July net losses, in a “stable but unexciting” labor market. Hiring remains tepid amid geopolitical uncertainty, AI growth, and a shrinking workforce, with the Fed focusing on inflation. Revisions are typically downward, and external factors like the Haitian TPS cancellation could affect August payrolls.
Democratic Michigan Senate candidate Abdul El-Sayed blamed President Donald Trump for a global bond market sell-off, arguing that Trump's trade wars and inflation-driven pressure on the Fed are making bonds more expensive, a claim that comes as Michigan's race against JD Vance grows more heated.
Fed Governor Christopher Waller said he is leaning to hold the federal funds rate steady at the September meeting if upcoming inflation data stay on track, arguing disinflation is taking hold even though inflation remains above the 2% target; he warned a data surprise could justify tightening and noted tariffs and energy prices have had muted effects. Markets priced around a 55% chance of a hike, and Waller stressed policy is currently only modestly restrictive, with upcoming CPI/PPI data and BEA revisions to the PCE index likely to influence the decision.
World Gold Council analysts say gold may slip toward $4,215/oz as short-term momentum fades and rising global yields pressure prices, with initial support near $4,311 and the 55-day average around $4,215; resistance is seen at about $4,474 and the 200-day average around $4,530, and a move above could lift the near-term trend, though the market may continue in a sideways range amid hawkish Fed signals and higher yields.