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Market Commentary

FOMC Announcement and Dots


Posted on September 25, 2018

As we approach the FOMC meeting decision this week, we know they are raising rates another 25 bps. What the market wants to hear is what the overall FOMC announcement has to say and where to updated projections (dot plots) looks like in the next few years.

Good morning!

  • Yes, the main event from the FOMC meeting that kicks off today will be the press conference and announcement of the rate projections (dot plots) tomorrow afternoon
  • The S&P/Case-Shiller National Home Price index increased by 0.2% in July to 203.0 from a prior reading of 202.6
    • On an annual basis the S&P/Case-Shiller National Home Price index was up 6.0%
    • The largest annual gains were posted by Las Vegas, Seattle, and San Francisco coming in at 13.7%, 12.1%, and 10.8% over the past year
      • Washington posted the slowest growth rate at 2.7%
    • Although home prices are rising, they have slowed considerably, with S&P saying, "The slowing is widespread: 15 of 20 cities saw smaller monthly increases in July 2018 than in July 2017. Sales of existing single-family homes have dropped each month for the last six months and are now at the level of July 2016…the index of housing affordability has worsened substantially since the start of the year."
  • One item not helping housing - the recent selloff in Treasuries has pushed the 30-year national average mortgage rate up 25 bp to 4.66% in the past two weeks, one of the sharpest increases seen in recent years and negative for the housing market
  • Conference board confidence numbers are due out later this morning
  • Brent futures rose $2.40, or 3%, to $81.20 a barrel Monday, piercing $80 for the first time since May and logging their highest settle since November 2014
  • Yesterday
    • The Chicago Fed manufacturing index held steady at 0.18 in August, while the Dallas Fed manufacturing index fell 2.8pts to 28.1 in September, both below forecast
  • News
  • Treasuries
    • 2-yr: 2.83%
    • 10-yr: 3.10%
    • 30-yr: 3.23%
  • LIBOR increasing ahead of the expected Fed increase next week
    • 1-month: 2.22%
    • 3-month: 2.37%
  • Fed funds effective was 1.92%

Have a super Tuesday!

Fred

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