First Rate Hike From Fed In 2022

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The Federal Reserve raised their Fed Funds Rate by 0.25% as expected on Wednesday this week. This is the first hike we have seen from them this year.

Because of this move, we will all start to see rates on mortgage rates, student loans and credit cards start to tick up.  The Fed Funds Rate does not directly correlate with these other rates but it does impact the market when the Fed makes these decisions, thus leading to volatility in other aspects of our lives.

Higher borrowing costs are meant to curb investments by consumers and businesses, as well as encourage saving. This is what our economy needs right now: Consumer prices grew 7.9% annually in the month of February. The Federal Reserve thought that it would just go up 2%.

Federal Reserve Chairman Jerome Powell says that one hike will not be enough. We could see as many as six more hikes this year to help with inflation. We will see where this balancing act leads.

Here’s what is happening to the markets today as we wake up:

The long-term Treasuries are soaring while short-term Treasuries are flat. Because of this, the yield curve is collapsing again.

Gold, silver and oil are on fire. Be sure to keep your investments in those areas.

The dollar is slipping and equities are moving back and forth.

With all of this news greatly impacting the markets, we had just learned that the 30-year fixed-rate mortgage rose again this week by 19 basis points. The average rate for this type of mortgage is at a 4.27% with 0.44 in points for this past week.

After the news this week, we should expect mortgage rates to continue to rise.

This not only hits potential homebuyers but it also is causing issues with home builder sentiment. The NAHB Housing Market Index, a measure of home builder sentiment, fell to 79 in March from 81 in February. After number over 50 indicates that more builders view conditions as good than poor. But the numbers are trending the wrong direction. There may be some caution as we continue into this year.

A lot of things are happening right now. If you would like to discuss in more detail about your situation and how to curb inflation on your end, reach out to us today: