Economic Indicators 11.08.24- It's been a week!
- Donald Trump: Has been named the new president elect and will take office on 20 January 2025
- The announcement resulted in a boost to the stock market as Wall Street's main indexes jumped to record highs with investors betting on lower corporate taxes and deregulation
- Mortgage Rates: The average 30-year fixed mortgage rate increased this week to 6.79% compared to 6.72% last week, according to Freddie Mac
- The Fed: met yesterday and announced a 0.25% interest rate cut, as expected. Making 0.75% of total interest rate cuts since September
- Whilst the recent rate cuts by the Fed will provide relief for credit card, auto and personal loans, mortgage rates have not decreased
- Mortgage rates have done the opposite and risen almost 1% since September
- Why are Mortgage rates staying high: they are directly tied to the 10-year Treasury bond yields which generally rise when investors expect stronger economic growth and higher inflation
- Since the middle of September there has been a series of stronger than expected economic data
- What's next: Major mortgage lenders and economists expect mortgage rates to stay around the 6% level in 2025
- As markets expect that policies under Trump will fuel inflation, such as, an acceleration of the growth of the budget deficit and the proposed tariffs on imported goods
- Higher inflation would make it hard for the Fed to reduce interest rates further
- There is some uncertainty now as to which policies will change under Trump but it seems that market expectations will keep mortgage rates above 6% for the remainder of 2024
- The next Fed meeting to discuss policy is on Dec 17-18.
