Fed Begins Exiting Mortgage Market, Ending 'Punch Bowl' Days
The Federal Reserve's nearly $4 trillion of bond purchases doubled its balance sheet and caused mortgage rates to hit new lows 15 times last year.
November 3, 2021 3 MIN
The Federal Reserve's nearly $4 trillion of bond purchases doubled its balance sheet and caused mortgage rates to hit new lows 15 times last year.
Housing starts dipped by 1.6% in September and the number of permits reached a one-year low while homebuilders grappled with supply-chain gridlocks.
Homebuilder confidence rose in October, the second consecutive month of gains, despite ongoing supply chain bottlenecks as the pandemic continued to stymie deliveries.
The University of Michigan’s preliminary consumer sentiment index unexpectedly dropped to 71.4, the second-lowest reading since 2011, a report on Friday showed.
The Fed said it could begin reducing its asset purchases as early as next month, according to minutes released on Wednesday.
Core inflation, known as the Fed’s preferred gauge because it excludes volatile food and energy prices, was flat in September. The overall inflation reading rose to a 13-year high.
The U.S. economy added 194,000 jobs in September, the slowest pace in more than a year, according to the Bureau of Labor Statistics.
An index measuring homebuilder sentiment rose in September, showing a more positive outlook for the new-home market, after three months of declines.
The pace of inflation, one of the key drivers of mortgage rates, eased in August as reduced demand resulting from a resurgence of Covid-19 infections offset some of the supply-chain bottlenecks created by the pandemic.
Inflation expectations among Americans in August rose to the highest ever recorded in the Federal Reserve Bank of New York’s survey of consumers while their outlook for home-price growth moderated.
Nonfarm payrolls increased 235,000, the slowest pace since January, as a Delta-driven resurgence of the pandemic kept many consumers at home.
A speech on Friday by Fed Chairman Jerome Powell had the potential of sending mortgage rates into gyrations. Instead, he soothed the markets.
A spike in lumber prices has added about $36,000 to the cost of a new home as builders and renovators compete for limited supply from sawmills, NAHB said in a new report.
The U.S. economy expanded at a 6.9% annualized rate in the final three months of 2021, triple the pace of the prior quarter, as Covid-19 infections spiked to record highs.
The consumer sentiment index from the University of Michigan plunged 13.5% in August to 70.2, the gloomiest outlook since December 2011.
The U.S. economy added 194,000 jobs in September, the slowest pace in more than a year, according to the Bureau of Labor Statistics.
