Reviewing the negative market performance and comparing 30-year mortgage rates with the Federal Funds rate
November 22, 2022
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this week. My name is Cody Moore, and I am a Wealth Advisor at Wealth E&P’s Alpharetta, Georgia office.
Today, we're going to start by taking a look at performance from last week and the three major indices in the chart below. The indices were mixed last week, with the S&P500 and the NASDAQ finishing slightly in negative territory. This is stemming from the Federal Reserve coming out on Monday stating they still plan to be hawkish and raise interest rates at least up to the 5% threshold. That would be about a full 1% or 100 basis points from where we're currently at today. That will continue to raise interest rates into the new year. The interest rates intend to hopefully level off sometime in Q2; the best-case scenario seems like they might start being able to cut some of those rates by Q3 of 2023. We'll keep you updated with the progress of that.
Secondly, we want to take a look at the 30-year fixed mortgage rates. It's been about six months or so since we've taken a look at this together, and as we discussed and predicted, that rate has about doubled from the last time we took a look.
If you look at the Federal Funds rate above and the 30-year mortgage rate, they do increase and sort of run in correlation together. The U.S. home sales have been negatively correlated here and have been decreasing throughout this year as well. With interest rates continuing to increase into the new year, we anticipate that mortgage rates will continue to increase at a similar pace. Hopefully, sometime in Q3, they can taper off and begin to come back down. We will see what the Fed does and how the economy overall reacts!
With that being said, we want to say thank you and we hope everyone has a wonderful Thanksgiving and safe travel seeing friends and family. If you have any questions for our team, would like a second opinion on any of your investments, want a risk profile, or would like a retirement projection, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our next Market Minute! We hope you all have a great week.
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