<\/p>\n
Several things happen on Fed Day–especially on the 4 out of 8 examples with updated rate forecasts from Fed members.\u00a0 The official announcement of a rate cut is typically the least important aspect.\u00a0 In fact, it is usually entirely unimportant in terms of its impact on mortgage rates.<\/p>\n
Instead, the bonds that determine mortgage rates are much more likely to react to the Fed’s dot plot (the chart showing each Fed member’s rate forecast over the next few years) and the press conference with the Fed Chair.<\/p>\n
The dots are released at 2pm at the same time as the rate cut announcement.\u00a0 The press conference follows at 2:30pm and usually lasts 50 minutes. This staggered timing makes for plenty of back and forth volatility on occasion and today was a prime example.\u00a0<\/p>\n
The dots helped bonds because they signaled better odds for two additional cuts in 2025 as opposed to only one.\u00a0 The market was mostly expecting that, but it wasn’t fully priced-in to prevailing rates.\u00a0 Things changed during Powell’s press conference and bonds ended up more than reversing the initial move.<\/p>\n
Powell framed today’s cut as a “risk management” cut and emphasized that the forecasts in the dot plot do not represent a plan for future cuts. Rather, the Fed will continue to take things on a meeting by meeting basis and make decisions based on the new data that becomes available over that time.<\/p>\n
As the underlying bond market responded, most mortgage lenders issued mid-day changes to the rates announced this morning. The net effect is that mortgage rates are most certainly HIGHER this afternoon compared to yesterday’s latest levels, not to mention this morning’s.\u00a0<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"
Several things happen on Fed Day–especially on the 4 out of 8 examples with updated rate forecasts from Fed members.\u00a0 The official announcement of a rate cut is typically the least important aspect.\u00a0 In fact, it is usually entirely unimportant in terms of its impact on mortgage rates. Instead, the bonds that determine mortgage rates […]<\/p>\n","protected":false},"author":1,"featured_media":1603,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[1252,651,212,153,721,154],"class_list":["post-1602","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan","tag-cut","tag-fed","tag-higher","tag-mortgage","tag-rate","tag-rates"],"_links":{"self":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/1602","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=1602"}],"version-history":[{"count":0,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/1602\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media\/1603"}],"wp:attachment":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=1602"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=1602"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=1602"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}