Bond Prices are down, and Interest Rates are UP

As of now, all eyes are and have been focused on the Federal Reserve and what they have done and will do with short term interest rates in the most recent months and in the future. On 7/26/23 the Federal Reserve raised the Fed Funds rate by 25 basis points as the market had predicted. This brings the short-term rates to a level we have not seen in 22 years. The market sentiment has been that the increases we have seen since March 2022 were enough to slow down inflationary pressures so that the Federal Reserve would stop increasing short term rates. As of today, 7/27/23 we saw a better-than-expected GDP (Gross Domestic Product) report released along with weekly unemployment claims that surprisingly dipped. These reports continue to show that the economy is still strong. Jerome Powell (Chairman of the Federal Reserve) would not confirm that this is the end of the rate hikes.

The Fed’s language in yesterday’s press conference was that they are leaving the options open to do future raises if needed. Over the next several weeks we will see additional economic data being released that will be heavily watch by the Federal Reserve to determine the future of monetary policy and future rate hikes. If these reports come out showing flat or stronger economic numbers from the month prior, this would tell the markets that the economy has not slowed down as much as previously thought, and that a growing economy will almost always push up inflation rates, so this would increase the pressure on the Fed to do further rate increases.

Regardless of the next moves, mortgage rates are still well below the rates in the early 1980’s and now is a GREAT time to purchase real estate.