Fed Holds Firm

  • The Federal Reserve tried to have it both ways yesterday, leaving
    short-term rates right where they were, but talking about getting tough
    with inflation. That leaves the Fed rate at 2%, making the Prime Rate
    6%. As you know, because you are a faithful reader, Fed Rates and
    long-term mortgage rates do not have that much to do with one another.
  • The long bond traders hated the news initially, but the stock
    traders hated it even more and by the end of the day we were back flat
    and repricing to the better.
  • So this morning we have the first tick down in certain rates we’ve seen in a month.
  • National Association of Realtors data this morning shows a 2%
    increase in month-to-month sales volume for houses, most of that in the
    markets like Vegas and the coasts, where house prices have dropped
    significantly. But again, it’s a sign of increasing activity.
  • My take? We’re on the housing bottom. There will not be
    significant national drops in home prices from here. It’s not going to
    get worse than it is. It is, however, going to stay bad for another
    nine months, so there’s a significant buying window here. Not that I’m
    a real estate expert, mind you.

Same recommendation today, if you’re going to buy, buy. Don’t
try to time the market. It’s a fool’s game.

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