💸 Fed Week

Issue 89 - Good Morning and Happy Tuesday.

We made it. The Fed will announce on Wednesday that it will reduce the Fed Funds Rate. Will it be 25bps (1/4 percent) or 50bps (1/2 percent)?

The mortgage market is assuming a 50bps movement and has priced this accordingly. So what the heck is the Fed Funds Rate? —> Read More Here

Long and short of it, if the Fed only cuts 25bps, we could actually see mortgage rates tick UP because it was not what the market already baked in. Yeah, wild, I know.

Personal note: The kids were spending the night at their grandparents' house Saturday, so we did exactly what every millennial married couple does with coveted free time: some house chores.

We cleaned out our “woodpile” that had been accumulating for the last few years next to our work shed and did some overall yard cleanup. We also created a new chore of a “dump run” for ourselves in the coming weeks—we really showed that weekend who the boss was.

Topped it off with a walk to the local sushi place for an early 5:45 dinner and watched “The Big Short” before dozing off at 10:30. Crazy lifestyle, I know.

Well, that article was a 🥶 freezing-cold take. Rather than re-opening and embarrassing me, let me just show you that I did hedge my prediction and we are now here:

INTEREST RATES
Rates 📢 September 17th, 2024

Rate data as of morning of publication. Unless noted otherwise, all scenarios are assuming 30 Year-Fixed mortgage, Purchase or R/T Refinance. No origination points charged, 780 FICO score, and 20% down payment. Provided for consumer education only and does not serve as a binding offer to extend lending. Payment period, interest rate, APR, and other terms subject to income, asset, and credit profile qualification. Provided courtesy of GTG Financial, Inc. NMLS 1595076. Equal housing opportunity. www.nmlsconsumeraccess.org

• Rate Markets: The march downward continues. Wednesday is the Fed rate cut day. There is a 65% chance of a 50bps cut!

• Bottom Line: Markets are reacting well to leaked Fed news. If it comes out that the cut is only 25bps, we could see a snap reversal in mortgage rates. Nothing crazy, but be prepared for confused consumers.

EVENT
Join Us For OKTOBERFEST

GTG Financial is proud to present the 11th annual OKTOBERFEST!!

When: Saturday, September 28th, 2024.

Where: 1919 Creekside Road, Santa Rosa, CA 95405

What: 11th Annual Oktoberfest Party

What to bring: Appetizer to share and 1 unwrapped, new toy for Toys for Tots.

No, you do not need to dress up; these are just some great pictures from last year. Free giveaways for kids, great food and drinks, and the weather is always beautiful in late September, Bennett Valley evenings!

TECHNICALS
25bps or 50bps?

🏠 GTG Weekly: Quick Market Update

• 📉 Inflation Cools: Consumer inflation rose 2.5% in August, its slowest pace since early 2021.

• 🏭 Wholesale Prices Ease: Producer inflation down to 1.7%, signaling further economic cooling.

• 💰 Fed Rate Cut on Deck: The Fed is expected to cut rates by 0.25% or 0.50% this week.

• 🏡 Housing Investment Shines: Home prices up 4.3% year-over-year, with a 20% appreciation forecast over the next 5 years—great opportunity for wealth creation.

Last week, the market only gave a 15% chance of a 50bp cut, but now that number has jumped to 65%.

A key reason for the shift? Nick Timiraos, often dubbed the "Fed Mole" for his accurate insights, recently hinted that a 50bp cut might be more likely, citing former Fed Vice Chair Donald Kohn's view that the labor market concerns favor a larger cut.

While the cut itself is important, keep an eye on the Fed’s tone in their statement and Jerome Powell’s press conference, which could further influence market reactions.

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