09 Jul Binds are Trading in Tight Channel
Mortgage bonds are struggling this morning as the market awaits news from the Federal Reserve Chairman, Jerome Powell. I don’t see a rate cut happening immediately. However, the key will be listening to the tone of his statements for clues as to when a rate cut will be announced. With the housing market now showing signs of struggling, many economists are starting to change their tune. Basically, we can plan on a recession. This will lead to lower mortgage rates in the future. The stock market will fall, and the housing market will continue to weaken. These are my thoughts and remain consistent with how I have felt for the past 18 months. It will be interesting to see how things play out.
The banking industry is starting to face serous struggles, with several key financial institutions facing significant layoffs soon. This is generally not a good sign for the US economy. Therefore, this will be something we will be closely monitoring.
There is little benefit to float an interest rate for near term transactions. However, I continue to see lower rates in the long term.