Nuwave Rate Update - 9.14.22
Yesterday, the CPI print was released and the shockwave was felt throughout all financial markets. Many economists believed CPI would decrease to around 8.1%, catalyzed primarily by the decline in oil prices. However, CPI was actually printed at 8.3%.
With this new data, the market is forecasting the FED will now hike interest rates in their September meeting by 75bps instead of 50bps previously expected.
Over the next week, leading up to the Sep 20th FED meeting, we will see mortgage rates bake in the expected 75bps rate hike. That increase has already started. We have seen a 37.5 - 50bps increase in interest rates in only a week. I'd expect by the end of next week to see an additional 25 bps added to these interest rates.
The only reason we would see a pullback in the rates next be would be if the FED is not as hawkish as they claim and only raise the rates by 50bps. However, I am not confident this will happen.
We are now quickly approaching the interest rate peak prior to the 2008 crisis. With no control of inflation on the horizon, I expect rates to stay at this level or higher through Q4 of this year and into Q1 of 2023.
