Rates Have Dropped Half A Point and More Good News Is on the Horizon

The Weekly Recap

The Fed’s most hawkish officials hint at an end to the hiking cycle as investors are also feeling bullish on interest rate cuts coming soon with Bill Ackman believing they are imminent in 2024, American’s set a record with Black Friday spending and then again on Cyber Monday spending $12 Billion online. The US economy was hotter than economists expected in Q3 and grew at an annualized rate of 5.2%. Tesla’s Cybertruck is now available to order and Berkshire Hathaway’s number two Charlie Munger passed away at age 99.

Rates Have Dropped Half A Point and More Good News Is on the Horizon

For five weeks in a row, mortgage rates have dropped a cumulative 50 basis points or .5% from 7.79% to 7.24%. This is a welcome change of pace from the news that we’ve experienced over the past 18 months with constant increases leading to challenges in affordability. The drop isn’t even the best part of the news. The decrease in rates have come not from the Fed reducing rates, but from the market adjusting with the Fed holding rates steady. When the Fed does eventually drop rates, and by some estimates can be 250 basis points over the course of 2024, we’ll see more buyers come off the sideline and more listings come to market.

The most staunch of Fed Reserve governors who have been adamant in meeting minutes about the need for aggressive rate hikes have turned the corner in their approach to raising rates . They’ve suggested that no urgency exists to continue to raise rates at their next policy meeting. Wall Street and Investors are betting on rates coming down within the next 6 months from a quantitative easing perspective where the Fed will actively lower rates, making borrowing money become more affordable for buyers and tolerable for sellers who may have ultra low rates now.

Even Treasury Secretary Janet Yellen is getting in on the positivity train. Following a speech in North Carolina, Yellen says that signs are “very good” that we will achieve a soft landing and with unemployment stabilizing. Believing that the Fed does not need to push the economy into a recession in order to get inflation down, the most recent CPI number showed that consumer spending and inflation had cooled in recent weeks with the obvious exception of the holiday shopping that historically follows the thanksgiving weekend.

Market Performance

Here are how some other indexes and asset classes have performed as of this mornings opening bell.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past week as well as newly signed contracts in Manhattan. Expected slowdown headed out of a long holiday weekend.

Mortgage Rate Update

Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates. The current trajectory of rates is an encouraging development for potential homebuyers, with purchase application activity recently rising to the same level as mid-September when rates were similar to today’s levels. The modest uptick in demand over the last month signals there will likely be more competition in a market that remains eager for more inventory.

News You Can Use

• Outlier Trade Bets on 250 Basis Points of US Rate Cuts in 2024 Bloomberg

• Investors See Interest-Rate Cuts Coming Soon, Recession or Not Wall Street Journal

• Fed’s Waller, Bowman Open Door to Another Interest Rate Pause in December Bloomberg

• US Economy Was Hotter than Previously Thought Axios

• Gen Z, Millenials are ‘House Hacking’ to Become Homeowners In a Tough Market CNBC

• Investors are Hungry for Risk- and Holding Record Cash Sums Wall Street Journal

• US Home Prices Hit Record with Eight Straight Months of Gains Bloomberg

• Wall Street Analysts Predict 2024 Vibes, From Inflation to Stocks Axios

• Americans Set Record With Holiday Shopping Axios

• NYC Congestion Pricing Board Recommends $15 Toll to Curb Traffic Bloomberg

• Charlie Munger, Investing Genius and Warren Buffet’s Right-Hand Man Dies at Age 99 CNBC

• Musk’s Cybertruck Is Already a Production Nightmare for Tesla Bloomberg

• After Munger’s Death, Berkshire Succession Comes into Focus Yahoo Finance

The Deep Insight

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