Why pricier mortgages shouldn't spook housing

Oct. 25, 2015

Updated 8:00 a.m.

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History shows that if mortgage rates rise, it does not necessarily mean house prices will drop. Higher rates typically coincide with strong economies, which means jobs - and thus greater buying power for home buyers. This photo shows a home for sale in Dana Point earlier this year. CINDY YAMANAKA, , CINDY YAMANAKA, STAFF PHOTOGRAPHER

As home selling once again takes its seasonal pause, an eerie pall haunts the real estate community: The specter of higher mortgage rates.
I’m not sure it’s worth the worry.
I tossed into my trusty spreadsheet a 25-year history of mortgage rate movements from the St. Louis Fed, local job growth from the Employment Development Department, and Orange County home price and sales volume data from CoreLogic.
What I found in the interaction between economic forces and homebuying habits is that pricier mortgages often coincide with eras of higher home prices. Since 1990, when mortgage rates have increased over a one-year period, Orange County’s median selling prices have risen by an average 8.7 percent in the same timeframe. And the following year, home prices advanced, on average, by 3.9 percent.
Certainly, that’s not the conventional wisdom. But even in the worst case scenarios – the 25 months with the largest one-year rate hikes – housing fared well: Prices averaged 11.1 percent gains that year and 2.3 percent in the 12 months that followed.
Yes, rising rates scare off some shoppers and chill home buying activity – but not in a big way.
Since 1990, when rates are up in a one-year period, Orange County home sales volume falls 2.2 percent on average in those 12 months, then declines 5 percent the following year. Sluggish, but by no means a crash.
And in the worst-case rate hikes, sales slowed modestly on average: down 5.4 percent during the year in question and another 3.9 percent over the next 12 months. Not a reason for panic.
So how can the nightmarish scenario for real estate pros – rising interest rates – actually be relatively benign, and perhaps even good news, statistically speaking?
Remember the three key words of real estate: Jobs! Jobs! Jobs! Interest rates commonly rise when the economy is hot – like today’s business climate, in which jobs are growing at a 3 percent annual pace.
Since 1990, mortgage rates have increased in one-year periods when local jobs are growing at a 2.1 percent average annual rate – twice the historical norm. Rising rates do increase house payments, however, so a house hunter needs plenty of confidence in the job market to make a leap into home buying mode.
Look what job growth means for housing. Since 1990, in any year when Orange County bosses are in hiring mode – that is, they generate year-over-year job growth – home prices have averaged 8.3 percent gains and similar size increases the following year. Sales activity is basically flat in the same two years – pretty remarkable stability amid a significant jump in pricing.
Then look at boom times. In the 25 months with the largest year-over-year job gains since 1990, Orange County’s average price gain is roughly equal to what was seen in all of those hiring years. But that faster-paced job growth means an average jump of 15.2 percent in homebuying activity the first year and 6.8 percent in the 12 months that follow.
Yes, these results are a bit counter-intuitive. And to be fair, history isn’t a perfect guide to the future. For example, home prices rose only 70 percent of the time in a year when mortgage rates moved higher – so industry fears of potential trouble aren’t totally unjustified.
Still, what should really be spooking the local housing market late in 2015? Any risk of a significant slowdown in Orange County’s biggest-since-the-’90s hiring spree.

Average rate on 30-year mortgage rises to 3.82%

A realty sign last year in front of a home for sale in Carlsbad.
(Lenny Ignelzi / AP)

WASHINGTON — Average long-term U.S. mortgage rates rose slightly this week yet remained below 4% for a 12th straight week.
Mortgage financing giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage increased to 3.82% from 3.76% a week earlier. The rate on 15-year fixed-rate mortgages rose to 3.03% from 2.99%.
Despite the increase, rates remained well below last year's levels, providing an inducement for potential homebuyers.
A year ago, the average 30-year mortgage rate was 3.97%, while the rate for 15-year loans was 3.18%.

In recent days, two influential members of the Federal Reserve's policymaking body spoke in favor of postponing an increase in its key short-term interest rate. The Fed has been expected to raise the benchmark rate later this year for the first time in nearly 10 years.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.
The average fee for a 30-year mortgage held steady from last week at 0.6 point. The fee for a 15-year loan also remained at 0.6 point.
The average rate on five-year adjustable-rate mortgages was unchanged at 2.88%; the fee remained at 0.4 point. The average rate on one-year ARMs declined to 2.54% from 2.55%; the fee was steady at 0.2 point.

7 ways you can cash in on historically low mortgage rates

ways you can cash in on historically low mortgage rates

Oct. 4, 2015

Updated 9:24 a.m.

By JONATHAN LANSNER / STAFF COLUMNIST

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How rising interest rates cut borrowing power

This example assumes a borrower has annual household income of $80,000 and puts one-third of it into a house payment.
• At 3.5 percent you can borrow $494,383
• At 4 percent you can borrow $465,004
• At 4.5 percent you can borrow $438,142
• At 5 percent you can borrow $413,545
• At 5.5 percent you can borrow $390,990
• At 6 percent you can borrow $370,277
Source: The Register

Graphics

Everybody is trying to guess what rising interest rates will mean for the housing market, but not enough people are focusing on what they can do about it before it happens.
Yes, we’ve been warned before that a rate hike is coming, and it still has not happened. But this time it feels like a reasonable certainty that we’ve seen the lowest mortgage rates in this cycle – and it was record cheap money.
No matter the timing of any serious rate increases in the future, today’s mortgage rates are what anybody before this century would have called an absolute steal. Fixed 30-year mortgages run in the 4 percent ballpark today. That’s up about a half-point from 2012’s absolute lows, but it’s still a bargain vs. the average rate of 5.5 percent since 2000 and the 10 percent average seen in the last 30 years of the 20th century.
And the opportunity is not simply in low rates.
I’m not sure many people know that lenders are far more generous today with both loan terms and approval standards than they were immediately following the Great Recession that wrecked their mortgage portfolios.
There are good reasons behind bankers’ renewed optimism: Home values have firmed, as have the paychecks that allow homeowners to pay back their loans.
Certainly, many households are satisfied with their housing and mortgage situations. But let me suggest some ideas to consider as 2015 winds down, because I have a hunch that years from now many folks will look back to today and say, “Gosh, I wish I could have borrowed more at those great rates.”
SIMPLE REFI
Have you checked rates lately? Do you even remember what rate you’ve got?
Forget all the hassles of borrowing a few years back, right after the recession ended. Lenders today have almost made the experience pleasant. I said almost!
And there are deals. Despite all the talk about rising interest rates, mortgage rates have quietly slipped back to around 4 percent as questions emerge about the economy’s durability and the Federal Reserve delays hiking rates.
Perhaps home values are up significantly in your neighborhood. Maybe there’s been a major improvement in your employment picture, paycheck or credit score. Be aware that the mortgage rate you could get these days might surprise you.
And if you think you’re living in a home where you will be for a long time, is this the time to pay extra points or loan fees to get an even cheaper rate with a refi and save even more money?
GO FIXED
Adjustable-rate mortgages became the scourge of the real estate business after the housing debacle, because too many aggressive borrowers, with the help of too many aggressive lenders, used these deals to buy or keep housing they couldn’t afford.
The resulting pushback from bankers and borrowers alike reduced the popularity of adjustable loans. Variable-rate deals funded 1 in 9 of all Orange County home purchases in the past seven years, after being used by half of all homebuyers in the previous seven years, according to CoreLogic statistics.
I suggest that homeowners with adjustable rate mortgages consider switching to a fixed rate.
Yes, the most popular adjustable rate mortgages do offer extended periods of locked-in starter rates, from five to 10 years. That’s plenty of delay before any future payment shock.
But why risk it ? It’s a good bet that today’s low interest rates on fixed rate loans are not much higher than what many borrowers are paying on their adjustable loans now.
So wouldn’t you feel foolish some years down the road if you hadn’t locked in today’s rates if your adjustable repriced higher? That’s one reason I refinanced this year.
EXTEND LOAN LENGTH
Many homeowners used the cheap money environment to pick up mortgages of shorter duration than the traditional 30 years to get even lower interest rates.
There’s only one problem with these shorter-maturity deals: Monthly payments are high, and much of the money is used to pay down principal, so tax deductions for mortgage expenses are reduced.
It’s not a small amount. The monthly payment on a 3 percent, $400,000 15-year mortgage is $2,762. That same-size loan, at today’s 4 percent rate for 30 years, costs $1,910 a month. That’s an immediate $852 advantage to going long.
Yes, a longer-term mortgage does have higher long-run interest cost. However, think how that improved household cash flow can be used in various ways to pay down other debts, invest in other goals – education or retirement – or keep a financial cushion for emergency purposes. (Yes, there will be another downturn.)
P.S.: If you’ll simply blow the fresh savings on luxury or frivolous goods, skip this idea.
BUY
First-time shopper? Moving up? Downsizing?
If you believe today’s mortgage rates are the last shot at a once-in-a-generation deal, it may be time to think about making that purchase.
Guessing which direction home prices will go is never a feasible way to time a home purchase. For every person who swears they saw the previous housing bust coming, how many saw the bottom and buying opportunity of 2012, too?
I know some homebuying holdouts are convinced that home prices are too high and will only go lower. I won’t debate the outlook, I’ll just ask: How long do you think it would take for serious discounts to appear?
Cheap interest rates could be history by the time any significant price drop materializes. That could mean a higher monthly payment, despite getting a deal on the selling price.
Ponder this: If mortgage rates jump a full percentage point in the next year, home prices will have to fall by at least 10 percent to offset the impact on monthly house payments.
CASH OUT
I know a lot of homeowners and financial consultants think taking equity out of the home is generally a bad idea.
Let me argue otherwise.
Assuming that you’re the type of financially savvy homeowner who won’t spend every last penny in your bank account, here is a sad truth about personal finances: No banker will lend when you really need money (say, if you’re out of work).
Today, assuming you’re gainfully employed with a solid credit history, lender generosity includes doing cash-out deals again.
I’ll assume you’d use the proceeds of a cash-out loan for a noble cause: paying off other debts, investing in other long-term needs or creating a hefty rainy day fund.
And for those approaching retirement with plenty of home equity, please just ask yourself where emergency funds will come from when the paychecks stop. Sadly, it’s easier to access home equity when employed, than not – unless you sell your home.
LINES OF CREDIT
If you just want the mental comfort of using your home as a financial backstop in a tough situation, getting a home equity line of credit today is an option.
Many lenders are offering these loans at little or no cost, with only a modest annual maintenance fee. You won’t incur any sizable extra house payments unless you access the line.
One downside is that these loans have a shorter lifespan than traditional mortgages – often just 10 years to use it and another 10 to pay it back.
And if you obtained a credit line a few years ago, it may be worth looking into getting a new one. Terms have improved. Or you can simply extend the life of your existing credit line.
INVEST
Let’s say you’re really bullish on real estate: Today’s cheap money can make a property investment pencil out profitably.
With a few significant caveats:
One, bankers still are cautious about loans for nonowner-occupied housing. So be prepared to bring a significant down payment to the deal and solid household financials – and be ready to answer plenty of questions.
Two, cheap money helped push up home values. That makes many investment deals not as profitable as hoped. Be realistic about any investment potential.
Three, be prepared for bidding battles. Numerous investors are making all-cash bids for investment-type properties.
Nobody said this would be easy.

You Deserve a Raise Today. Interest Rates Don’t.

By THE EDITORIAL BOARDSEPT. 7, 2015

Photo

Credit Alex Nabaum

For most Americans, paychecks determine living standards. Unfortunately, wages in America have long stagnated or declined for most working people, including college graduates.

The disappointing employment report for August — in which wage growth showed no sign of accelerating — only drove home that reality.

Worse, flat or falling pay is self-reinforcing because it dampens demand and, by extension, economic growth. In the current recovery, median wages have fallen by 3 percent, after adjusting for inflation, while annual economic growth has peaked at around 2.5 percent. At that pace, growth isn’t able to fully repair the damage from the recession that preceded the recovery. The result is a continuation of the pre-recession dynamic where income flows to the top of the economic ladder, while languishing for everyone else.

Policy makers should be focused on strategies to raise wages, but the opposite appears to be happening. Just as Congress enfeebled the economy by switching too soon from stimulus spending to budget cuts, Federal Reserve officials have all but vowed to begin raising interest rates this year. That move reflects a belief that the economy is returning to “normal,” but it would be premature, because today’s norm is an economy that is incapable of generating and sustaining broad prosperity.

In a healthy economy with upward mobility and a thriving middle class, hourly compensation (wages plus benefits) rises in line with labor productivity. But for the vast majority of workers, pay increases have lagged behind productivity in recent decades. Since the early 1970s, median pay has risen by only 8.7 percent, after adjusting for inflation, while productivity has grown by 72 percent. Since 2000, the gap has become even bigger, with pay up only 1.8 percent, despite productivity growth of 22 percent.

Why has worker pay withered? The answer, in large part, is that rising productivity has increasingly boosted corporate profits, executive compensation and shareholder returns rather than worker pay. Chief executives, for example, now make about 300 times more than typical workers, compared with 30 times more in 1980, according to the Economic Policy Institute. Other research shows far greater discrepancies at some companies.

For younger people, pay has actually declined. The average hourly wage for recent college graduates in early 2015 was $17.94, compared with $18.41 in 2000. That “loss” in starting pay, about $1,000, can carry over to diminished earnings for years to come. Young high school graduates have it even worse. Their average hourly pay was $10.40 in early 2015 versus $11.01 in 2000.

The Fed is a crucial player in reversing those trends, since one of its mandates is to foster full employment. Wage stagnation is a clear sign that the economy is not at full employment, which means it needs loose monetary policy, not tightening. An interest rate hike, by sending the wrong signal of economic health, could make it harder for labor groups and policy makers to assert the urgency of their efforts to raise pay.

In the past year, low-wage workers have successfully fought for minimum wage increases in states and cities. Congressional Democrats have championed legislation to raise the federal minimum wage and to fight wage theft and abusive worker scheduling. The Labor Department is moving ahead with a much needed new rule to update the nation’s overtime-pay laws.

In the midst of those efforts, it would be a setback for the Fed to act as if the economy is already near full employment. It’s not. The proof is in the paycheck.

Current Mortgage Rates for Monday, August 31, 2015

August 31, 2015

Mortgage rates hit recent lows early last week, only to rise again later in the week as mortgage-backed securities sold off.  The primary drivers of the market action of late have been the stock rout in China (and the fears of slowing growth that accompany that sell-off).  This has made the market wildly unpredictable, and has caused bond yields to be all over the place.  Last week’s Primary Mortgage Market Survey from Freddie Mac showed that rates fell to 3.84%, but that was mostly reflective of conditions early in the week.  Rates are effectively a little higher than that now.  This morning MBS are rallying a little bit, and rates are under a small amount of downward pressure.

Today (and yesterday’s) economic data:

This week is fairly data-intensive, but today’s data is not especially influential:

• Chicago PMI came in a little below expectations, with a print of 54.4 versus expectations of 54.9.  New orders slowed, and order backlogs were in contraction for the seventh consecutive month.  The labor component of the report was in contractionary territory for the fourth consecutive month.  This report in and of itself wasn’t awful, but there are some bad harbingers here.
• The Dallas Fed Manufacturing Survey… oof.  The consensus prediction for August was -2.5.  The print was -15.8.  This is coming off a July print of -4.6.  This report is obviously heavily influenced by the steep decline in oil prices, so I don’t know if this should be written off as aberrational, or what.  It’s a bad report, but I don’t know that it will impact the markets all that much.

Manufacturing continues to struggle.  This is nothing new, and has been the case all year.  The strong dollar and falling commodity prices (particularly oil) continue to weigh on the sector.  So it goes.

Looking Back:

Well, last week was a crazy week.  Bond were driven by equities, which were in turn driven by events in China.  Stocks started off the week *way* down, and bond rallied as a a result.  Yields on 10-year Treasuries fell to as low as 1.92% on Monday at the depths of the stock sell-off.  Mortgage backed securities, which trade at a spread to Treasuries, rallied accordingly, and for a brief period rates were at 3-4 month lows.  Equities rebounded as the week wore on, and bond yields rose as high as 2.20% on Thursday, and then fell back to the 2.15% range on Friday, which is currently where they are sitting.  It was a crazy week, and the situation in China is far from settled.  It seems very likely that we’re going to continue to see pretty wild swings in the near term.

Looking Ahead:

Well, there’s plenty of domestic data this week, much of which is predicted to be similar to last month’s data.  Among the highlights, we get the August ISM Manufacturing report tomorrow, International Trade on Thursday, and the August jobs report on Friday.  The consensus for the employment report is that the economy will have added 223k jobs, which is more or less where the report has been for months now.  As I noted above, the market has mainly been moved by overseas influences, which makes it exceedingly difficult to say with any certainty where things will be at the end of the week.  That said, it’s worth burning a few words about the Fed, which is oddly unperturbed by the low rate of inflation.

What’s up with the Fed?

Last week the core PCE Deflator for July was published, and it showed growth of 1.2%, year-over-year.  This is one of the key metrics by which the Fed gauges inflation.  The Fed’s target for inflation is 2%, and we haven’t been close to that goal anytime recently.  The strong dollar and the fall in commodity prices should prove disinflationary for the U.S. and one would think that we should see even less inflation moving forward.  The Fed, which has consistently predicted higher inflation over the past several years, only to see their predictions fall flat, seems nonplussed by this situation, and still seems intent on hiking rates this year. if you believe the various interviews and speeches that came out of the Jackson Hole Symposium.  Tim Duy put up a nice run-down of this on Friday.  I’d suggest reading the whole thing, but this is the jist of it:

“The Fed very much wants to ignore the inflation data and follow the labor markets. And even as inflation drifts further away from their target, they keep doubling down on their bets. It’s what the Phillips curve is telling them they should do.
Bottom Line: The Fed doesn’t want to take September off the table. Many officials had what they believed was a solid case for hiking rates at the next meeting, and they don’t want market turmoil to undermine that case. And that case is not complicated. It’s the Phillip curve combined with an estimate of full employment (an estimate of full employment that remains sticky despite the persistent downtrend in inflation). If they move in September, that’s the story they will run with. They don’t have another paradigm.”

Seems to me that a near-term hike would have a neutral impact at best, and would be disastrous at worst.  I cannot see how it would be good, except to maintain the Fed’s “integrity,” as they’ve been talking about hiking for what seems like forever now.  I understand they don’t want to be perceived as looking at one month’s data, and reacting.  But when things change drastically, it seems imprudent/strangely inflexible not to react.  As Bob Dylan once said, “you don’t need a weatherman to know which way the wind blows.”

As for mortgage rates?

Mortgage rates are going to move with Treasury yields, and Treasury yields are currently being moved by stocks which are being moved by overseas influences, and to a degree, the Fed.  As some point things will settle down, but right now we’re all over the place.  I’ve backed away from a prediction of 30-year rates ending the year between 4.25-4.50%, but if the Fed hikes in September (or October), I do believe that rates will spike.  Right now we’re enjoying a dip in rates, and if I were looking for a mortgage, I would take advantage of it.

And now for something completely different:

Is there a more dysfunctional organization on this planet than the Washington Redskins?  Perhaps one of the European governing bodies?  Perhaps. I don’t care one way or another about the Skins, but it’s certainly a fun show to watch.  It’s a little reminiscent of the 80’s Steinbrenner Yankees.

This week’s economic data that could impact mortgage rates:

Monday:

• Chicago PMI
• Dallas Fed Manufacturing Survey

Tuesday:

• PMI Manufacturing Index
• ISM Manufacturing Index
• Construction Spending

Wednesday:

• ADP Employment Report
• Factory Orders

Thursday:

• International Trade
• Weekly Jobless Claims
• ISM Non-Manufacturing Index

Friday:

• Nonfarm Payrolls

 #robertdarvish #bobbydarvish #mortgagerates #platinumlending #orangecounty #loan #finance #realestate #homepurchase #homerefinance #interestrates #darvish

Real Estate 8/09/2015 @ 10:57AM 1,529 views

What The Employment Report Can Do To Your Home Buying Plans

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No other economic report gets more attention, is more closely watched, analyzed, dismissed, cited as a barometer or has a bigger impact on mortgage interest rates than the Employment Report. I have been in front of a TV at 8:30 in the morning on the first Friday of almost every month for the past 25 years, waiting with great anticipation to see what that number will look like.  This is immediately followed of course with fretting and wondering about how the financial markets will respond and what will happen to interest rates that day.
The mighty jobs report can have an immediate and significant impact on your monthly mortgage payment. Generally speaking; good economic news tends to be bad interest rate news and vice versa.
A strong Employment Report with lots of jobs created, a real increase in hourly wages and a low unemployment rate without a labor force participation asterisk, is often the start of a tough day for interest rates. The financial markets tend to take robust jobs numbers and bolster economic forecasts, reckoning that growth will surely follow and it is now safe to chase riskier equity market assets for bigger returns.

Meanwhile, the safe haven credit markets drain from the flight-to-risky runoff and suddenly there are more Mortgage Backed Securities (MBS) than there are interested buyers. MBS prices move lower and yields move higher. Higher yields mean higher mortgage rates, higher mortgage rates mean higher monthly mortgage payments, higher monthly mortgage payments may alter a well-constructed home buyer decision tree. Every house on the market just got more expensive.

The Best And Worst Cities To Buy A Home Rather Than Rent

Financial markets prognosticators argue that economic forecasts are already “priced-in” to the markets well ahead of the actual report. That would mean of course that the jobs report release would have virtually no impact on trading activities, as long as the results are in line with the forecast.  This past Friday we saw numbers that were near forecasts and interest rates weathered the day virtually unchanged.
Once in a while the actual numbers reported are significantly weaker or stronger than expected and the financial markets can respond dramatically.  An unexpectedly weak jobs report has been known to trigger a rally in the credit markets and drive rates lower, while upward pressure on rates can result from unexpected strength.
Time was, the unemployment rate alone could be market moving, but now all of the economic data contained in the report is digested and assimilated into market force movements. Right now all eyes are on the Fed waiting to see when they will pull the trigger on that long awaited, hyper-analyzed short term rate hike.  Bets are placed on which economic release will be the last piece of the tipping point puzzle and the big daddy is the Employment Report. After seeing the results from this past Friday, the smart people seem to think that September will not be when the Fed’s generously accommodative monetary policy ends.

After 25 years of objective observation, I submit that the headline unemployment rate no longer has the muscle it once had.  It is and always has been just a telephone survey of selected households, until it was coopted as a political football on the eve of the 2012 elections. Now it has become more of a political tactic than an economic indicator and has lost the stand alone market moving credibility it once had.
The financial talking heads tend to gloss over the underemployed, the jobless claims and the newly-retired-because-no-jobs-exist, and talk about how great things are because the unemployment rate is 5.3% today. But ask the downsized class how they are doing after losing long-term employment in their mid-to-late fifties; find out what their prospects are like, show them that blockbuster 5.3% unemployment rate and see what they have to say.
And for now, get used to that higher monthly mortgage payment.

Dollar rises as Fed keeps interest rates on hold

Author Adam Carter Published August 2, 2015 Comments 0

It is imperative to state that the unemployment rate has reached a seven year low of 5.3 percent which is being seen as a huge positive.

“They haven’t made up their minds, but… we’re getting that much closer to satisfying their criteria” for a rate hike, Hanson said.
But Baumohl says not to bet the farm that we’ll see any rate hike at the next meeting, because so many people have been anticipating an increase for the past year.
Although the September meeting, when Yellen is set to hold a news conference, is seen as the most likely time for a rate increase, some analysts think the Fed might wait until December.
“

The addition of a single word “some” in the sentence below is the strongest indication we are indeed creeping closer to a rate hike”,

Alan Ruskin, global head of Group of 10 foreign exchange at Deutsche Bank AG, said in an e-mail.
In determining how long to maintain this target range, the Committee will assess progress-both realized and expected toward its objectives of maximum employment and 2 percent inflation.
Gold fell more than 1 percent to near its weakest level since early 2010 on Thursday, as the dollar jumped ahead of US economic data that is likely to strengthen expectations for an interest rate hike by the Federal Reserve in September. Though the rate-setting committee has not raised rates, as expected by the markets, it, nevertheless, dropped some hints that the rate hike is not far away.
Chris Williamson, chief economist at Markit, said: “The improving job market, alongside the boon to households from low inflation and falling oil prices, has been key to the economy’s ability to sustain strong growth”. He believes a rate hike is still possible in September, but he said the odds are not as good following Wednesday’s statement. Treasury prices were largely unchanged after the Fed statement. U.S. The Fed still expects inflation to rise gradually toward its 2 percent target. The first-quarter figure was revised to a gain of 0.6 percent from a previously reported contraction.
At the same time, inflation has lingered below the Fed’s goal for three years, with the central bank’s preferred gauge rising just 0.2 percent in May from a year earlier.
Brent settled down 7 cents, or 0.1 percent, at $53.31 a barrel, while U.S. crude closed lower by 27 cents, or 0.6 percent, at $48.52. So they do not expect the monthly payroll numbers to shock on the downside.
“Economic activity has been expanding moderately in recent months”, it said in a statement.
“The most important thing the Fed is trying to communicate is not the timing of the first liftoff, but the pace, and continuing to try to counsel the markets about the pace being gradual”, said Roger Bayston, senior vice president and director of fixed income at the Franklin Templeton fixed-income group in San Mateo, California.