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Last Week in Review: The Big Rate Hike

This past week, the Federal Reserve raised the Federal Funds Rate by .75%, the first such hike since 1994. Let's walk through what the Fed said and how the financial markets reacted.
"Clearly, today's 75 basis point increase is an unusually large one and I do not expect moves of this size to be common," Federal Reserve Chair Jerome Powell.
The largest rate hike in 28 years comes on the heels of the recent Consumer Price Index report, which showed a surprising spike higher in inflation. Up until that reading, the Fed Chair had led the markets to believe the Fed would only raise rates by .50%. However, true to his word, he said the Fed would "be nimble" and respond to the incoming data.
In addition to the rate hike, the Federal Reserve released their updated forecasts on the economy. They raised their expectations on inflation almost a full point from 4.3% to 5.2%. And they lowered their economic growth forecast from 2.8% to 1.7%. Lastly, they raised their forecast for the Federal Funds Rate from 1.9% to 3.4%. On the heels of last Wednesday's rate hike the Fed Fund Rate is now in a range of 1.50 to 1.75% so the markets are currently expecting about an increase of 1.75% to the Fed Funds rate between now and year-end.
As of this moment, the Fed sees the economy slowing, prices remaining high, and they will be raising rates even higher to help lower inflation.
"I think events of the last few months have raised the degree of difficulty, created great challenges, and there's a much bigger chance now that it will depend on factors that we don't control." Federal Reserve Chair Jerome Powell.
This quote highlights the challenge of the Fed. Can they administer a soft or as Powell says a "soft-ish" landing and avoid an economic recession after hiking rates further?
When Powell says it depends on factors they can't control, he means energy prices. Powell said, "we have no effect on energy prices". This makes things harder for the Fed because energy prices are the major contributor to inflation and increasing rates will not have an impact.
It's important to remember that Fed rate hikes have zero correlation with mortgage rates. It may seem contrarian, but rate hikes are intended to slow demand and lower inflation, which is good for long-term rates as it protects their value over time.
Back to the Future
In 1994, Fed Chair Greenspan raised rates by .75% and at that very moment, long-term rates like mortgages peaked. We will find out if history repeats itself upon Powell's .75% rate hike this past Wednesday.
For the foreseeable future, expect continued market volatility and uncertainty as we watch to see if inflation peaks and how much the Fed will hike rates – all while avoiding a recession.
Bottom line: As we watch to see if long-term rates peak due to the more hawkish Fed and .75% rate hike, an incredible opportunity remains in housing. Home loan rates remain beneath the current rate of inflation which is something that has not happened in nearly 50-years.

Last Week in Review: Three New Concerns for the Fed

This past week, home loan rates increased slightly from the previous week as we are just a couple of days away from the next Fed Meeting. Let's walk through what happened and discuss what to look for in the week ahead.
As we approach the highly anticipated Fed Meeting this Wednesday, June 15th, their job is growing increasingly tough as the economy slows while inflation remains elevated. Here are three new issues that make the Fed's desire to hike rates expeditiously, very tough.
1. Personal Savings Rate Falling Fast
The Personal Savings Rate, the amount of disposable income people save, was only 4.4% in April, the lowest since the Great Recession in 2008. A low savings rate is a concern because our economic growth depends on consumer spending.
If the consumer retreats and slows spending, it could cause a recession as consumer spending makes up two-thirds of our Gross Domestic Product (GDP). There are many reasons for the personal savings rate declining. Likely the largest reason is inflation. Headline inflation, which contains food and energy costs, is running at over 8% annually and this is weighing on the ability to save.
Another reason for the decline is the desire for many to go out and spend money in a post-Covid world. The first half of the year saw many people spend on leisure and hospitality, which also weighs on the ability to save money.
As it relates to the Fed, they are looking to hike rates to slow demand and get it more in balance with supply, which then lowers prices/inflation. However, if the savings rate remains low or declines further, consumer spending and demand will slow, and inflation will come down on its own. The Fed will need to watch how these numbers look in the months ahead as it determines if and how much to raise rates.
2. Consumer Debt on The Rise
If you see the savings rate decline as consumers continue to spend, it's reasonable to think credit card debt is also on the rise and it is. Last Wednesday, it was reported that revolving credit card debt rose by $17.8B, the second-fastest pace on record.
Moreover, total revolving consumer credit has risen back over $1T to pre-pandemic levels. Why is this a concern? Credit card debt is directly tied to Fed rate hike activity. So, this enormous increase in credit card debt is coming at a time when the Fed is supposed to hike rates, making this debt cost consumers even more.
If you couple the personal savings rate declining with debt rising, it is easy to see why the Fed is in a tough spot trying to hike rates. If the Fed does too much when the consumer is already cutting back, it will elevate recession fears even further.
3. Energy Prices Elevated
Oil is trading at over $120 a barrel, more than doubling in the last 18 months. This has lifted the national average gas prices to nearly $5 a gallon. Moreover, diesel prices remain at all-time highs. This sustained rise in energy is making the cost of daily essentials excessively high and is already starting to have a negative impact on consumer spending. Target recently reported that larger items like televisions and exercise equipment are sitting on the shelves as consumers spend more money to bring home daily essentials.
Elevated energy prices are another problem for the Fed. The Fed has never hiked rates with oil above $100 a barrel. If high oil prices are already forcing the consumer to make other choices and slow spending, then hiking rates would only make that problem worse. As it relates to inflation, Fed rate hikes will not lower energy prices either.
One could argue that high energy costs are doing the job of the Fed...slowing demand and taking money out of the economy.
Bottom line: These themes above will limit how high long-term rates, like mortgages, can go. In fact, prices have been moving sideways over the last 60 days, suggesting that a bottom is in place. What happens at the Fed Meeting may very well cement which side of 3.00% the 10-yr Note will reside.

Last Week in Review: The Feds Job on Jobs

Home loan rates increased slightly from the previous week as we are just a couple of weeks before the next Fed meeting. Let's walk through what happened and discuss what to look for in the week ahead.
"As I will explain, this very tight labor market has implications for inflation and the Fed's plans for reducing inflation." Fed Governor, Christopher Waller.
The Labor Market is Starting to Show Signs of Weakness
Promoting maximum employment is the second part of the Fed's dual mandate. The other part is maintaining price stability or inflation. The Fed has been saying the labor market is extremely tight and they want to see it cool off some. By cooling the labor market a bit, the Fed expects consumer demand to slow and prices to come down. As you can see this is a difficult situation to manage and why the fears of recession have risen sharply of late.
In the last couple of weeks, we have seen signs that the labor market is starting to cool. Many tech firms like Snapchat and Netflix said they over-hired and have cut jobs. The Initial Jobless Claims report, a leading indicator of the health of the labor market, has been showing weekly increases in people seeking unemployment benefits. Last Thursday, the ADP Report, a reading on private job creation, came in at the lowest levels in 2 years.
We shall see what the Fed says about the labor market on June 15th, when they release their Monetary Policy statement...and we are going to find out what they are going to do about it. Currently, the financial markets are expecting the Fed Funds Rate to rise by 1.75% or so from the current .75% level.
Fed Backtracks Underway
Up until recently, the Fed has been speaking very hawkish about their need to increase rates "expeditiously". This jawboning measure has had an impact on the economy and many rates, like mortgages which have already increased expeditiously.
Add this to Core inflation being tamer the past couple of months and the recent weaker labor market news – and its giving rise to the recent Fed speak to be less hawkish or tough on future rate hikes.
We shall find out what the Fed will say on June 15th, but we are continually reminded of how they said they would be "nimble" and react to the incoming data.
They may need to be nimble as they do not want to over hike rates and attempt to shrink the balance sheet if the economy is slowing, otherwise, the Fed's action could tip the US into a recession.
Bottoming out Process is Not Pretty
Home loan rates have moved sharply in both directions in the last 2 months as mortgage-backed security prices attempt to find a price bottom/rate peak.
The good news? Currently, MBS prices are exactly at the same levels they were in mid-April. So, while rates moved higher one month ago, they are attempting to settle at the best levels in 45 days.
Bottoming out processes in financial markets are never pretty and we should expect more volatility ahead. But...it is starting to appear like we may have made a peak in rates over the last 30 days. The incoming data, along with fiscal and Fed policy will determine so.
Bottom line: If you or someone you know are considering a mortgage, now is a great time. Rates have improved slightly but any improvement from here may be modest as inflation remains very high.

Last Week in Review: Some Good News on Rates

This past week, home loan rates improved to the best levels in a month. The 10-yr Note yield closed beneath 2.80% for two consecutive days for the first time since April 13th. Moves like these begin to suggest that rates may have peaked. The main reason for the decline in rates is due to rising fears of a recession.

Last Thursday, the 2nd reading of 1st Quarter GDP showed a 1.5% contraction in economic growth. A textbook definition of a recession is two consecutive quarters of negative growth or contraction. Currently, estimates for the 2nd Quarter GDP sit around 1.5%. When coupled with the 1st quarter contraction, we will either experience a recession or something very close.

We also had some corporate earnings this week, which showed high energy costs are starting to hurt the consumer. Target and Best Buy said sales of big-ticket items like televisions and exercise equipment have slowed. Durable Goods Orders for April also showed consumers' appetite for large purchases has waned as energy prices remain elevated.

A barrel of oil is at $112 despite measures like tapping the Strategic Petroleum Reserves and China still in a big lockdown with its zero-covid policy. There is a rising concern that oil prices will move another leg higher upon China's eventual full re-opening and demand increasing sharply. Another oil spike would be unwelcomed just as the Federal Reserve is set to raise rates by .50% in each of the next two months.
Speaking of the Fed, the financial market is starting to sense the Fed will pause after a couple of rate hikes. The incoming economic data will determine how far the Fed will go.

Some signs inflation may have peaked too. The 10-yr inflation expectations have declined sharply in the past couple of weeks and that too is a reason why yields/rates have declined. Seeing long-term inflation expectations decline is very important to the Fed as they do not want to see consumers “expect” higher prices in the future or it will likely happen.

Bottom line: Home loan rates are showing signs of peaking with rates hovering near current levels over the last month. Uncertainty and volatility around inflation, the Fed, and economic growth will continue to push rates and stocks around. If you are considering a purchase transaction, now is a great time to lock.

Last Week in Review: Recession Fears Emerge

This past week, home loan rates improved slightly in response to growing fears of a recession. Let's walk through what happened and discuss what to look for in the week ahead.
"What we need to see is inflation coming down in a clear and convincing way, and we're going to keep pushing until we see that." Fed Chair Jerome Powell May 17, 2022.
The Consumer is Still Spending
Last Monday, Retail Sales for April came in better than expectations, showing the consumer remains a bright spot in the U.S. economy. Despite soaring energy prices, consumers spent on automobiles, restaurants, and travel.
Consumer spending makes up nearly 70% of our Gross Domestic Product (GDP), so we need to see the consumer continue to spend if we want our economy to expand. A tight labor market should help the consumer continue to drive economic growth for now.
Single-Family Housing Starts are Stalling
The National Association of Home Builders reported new single-family house construction stalled in April in response to "weaker confidence in the single-family market, as rising mortgage rates and building material construction costs are driving more potential buyers out of the market," per Jerry Konter, chairman of the National Association of Home Builders (NAHB).
Overall Housing Starts for April remain steady, thanks to a surge in multi-family dwellings. It's clear that demand for housing remains strong and the current tight labor market should continue to drive this demand, despite the uptick in rates.
Target Misses Target
"We faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time," said Target CEO Brian Cornell.
Soaring diesel costs and lingering supply chain issues were the main drivers cutting their profit margins. Cornell also shared that Target shoppers are concerned about 'the high and persistent inflation they've been experiencing, particularly in food and energy.'
Shoppers continued to buy daily essentials, but as prices increase, consumers aren't splurging on bigger-ticket items. This reflects how inflation works, if consumers are paying too much on energy and food, they will not spend money on other items.
In Comes Recession Fears
As mentioned earlier, if consumer spending slows, GDP will decline and if we endure back-to-back negative growth quarters of GDP...that would meet the textbook definition of a recession.
Stocks did not like the reports from Target and other retailers like Best Buy and Walmart and sold off sharply. Also pushing stocks lower is the idea the Fed will hike rates too much and push the economy into a recession, in order to lower inflation pressures.
The selling pressure on stocks came to the benefit of rates as the 10-year yield moved from 3.00% to 2.78% between Wednesday and Thursday.
Bottom line: Home loan rates are showing signs of peaking with rates hovering near current levels over the last month. Uncertainty and volatility around inflation, the Fed, and economic growth will continue to push rates and stocks around. If you are considering a purchase transaction, now is a great time to lock.

Last Week In Review: CPI High, Rates Sigh
This past week, home loan rates bounced around in a volatile fashion in response to more of the same...Fed speaks, inflation readings, and uncertainty. Let's walk through what happened and discuss what to look for in the week ahead.

"Although the task is difficult, it is not insurmountable. We have the tools to return balance to the economy and restore price stability, and we are committed to using them," New York Fed President, John Williams.
One week after the first .50% rate hike in 22 years, there were many Fed officials out using soothing rhetoric in an attempt to reassure financial markets they will be able to lower inflation while maintaining economic growth. Fed rate hikes and balance sheet reduction are intended to help slow consumer demand and there is now a growing fear the Fed will "overcook" the rate hikes and slow the US economy into a recession.
Stocks are sharply lower in 2022 and one of the main drivers is fear of a sustained economic slowdown. If the economy slows down, consumer demand will slow and that would likely lead to lower long-term rates, like mortgages. Bond yields or rates may already be giving us a sense that long-term rates may be close to peaking. The 10-yr Note backed well off its Monday high of 3.20% to reach 2.82% by midweek.
Inflation Has Not Yet Peaked
The April Consumer Price Index (CPI) was reported on Wednesday, and it was a bad surprise. The headline CPI, which includes food and energy prices, came in at a scorching 8.1% year over year. This, despite seeing an energy pullback in April. Energy prices have since moved higher, with diesel hitting all-time highs, so we should expect May's headline CPI print to remain higher than we would like.
The big disappointment was the higher-than-expected Core CPI, which removes energy and food. This month-over-month reading came in at a blistering 0.6% to bring the year-over-year reading to 6.2%, more than three times hotter than the Fed's target of 2% over the longer term.
"There are things we can do and we can address. That starts with the Federal Reserve, which plays a primary role in fighting inflation" President Biden.
President Biden reaffirmed the Fed's mandate of maintaining price stability or inflation. The challenge for the Fed? The Fed tightens monetary conditions and slows down demand by hiking rates. These rate hikes will not do much, if anything, to help lower energy and food costs. With energy being a component in many goods and services, we should expect headline inflation to remain stubbornly high for some time.
A Long-Term Trend Remains Our Friend
For those considering a home purchase and worrying about rising rates, there is a positive trend to consider.
Over the last 40 years, every time the Fed hiked rates the 10-yr Note yield never reached the peak from the previous hiking cycle. The 10-yr Note hit 3.20% this past Monday and the previous peak was 3.25% - the last time the Fed hiked rates in 2018. Could we have hit a rate peak this week? Time will tell.
Bottom line: Home loan rates remain on a trend higher. Uncertainty and volatility around inflation, the Fed, and economic growth will continue to push rates and stocks around. If you are considering a purchase transaction, now is a great time to lock.

Last Week in Review: The Fed Takes Action

This past week, the Federal Reserve hiked the Fed Fund Rate by .50%, the largest rate increase in 22 years. Let's discuss what other action the Fed took, how the market reacted and what to look for in the week ahead.
"I would like to first speak to the American people. Inflation is much too high, and the Fed understands the hardship and is moving expeditiously to bring down inflation." Fed Chair Jerome Powell - May 4, 2022.
How does the Fed move to bring down inflation? Raise rates and tighten monetary conditions. And this started last Wednesday when the Fed raised the Fed Funds rate by .50%. In a separate measure, the Fed will also begin shrinking its enormous $9T balance sheet of Treasuries and mortgage-backed securities (MBS).
It is important to remember that this hike in Fed Funds Rate has no direct effect on home loan rates. Oddly enough, the measures the Fed is taking to lower inflation help preserve the value of long-term bonds like MBS. If the Fed is successful in bringing down inflation, it will help long-term bond prices improve and long-term rates remain relatively stable.
The lift to the Fed Funds Rate will immediately impact all short-term loans, like auto loans, credit card debt, and home equity lines of credit. Increasing these rates is expected to slow consumer demand, which in effect will slow price increases.
Powell gave the market comfort when he said there was "a good chance to have a soft landing". Meaning the Fed can continue to raise rates more and slow demand without pushing the economy into a recession.
How much more will the Fed hike rates? The Fed Chair signaled they are likely to raise rates by another .50% in both June and July. Of course, making these moves will depend on the incoming data. This means we should continue to expect high-interest rate volatility around key economic reports like inflation, GDP, and the labor market.
"Beginning on June 1, principal payments from securities held in the System Open Market Account will be reinvested to the extent that they exceed monthly caps." FOMC announcement on balance sheet reduction.
The balance sheet reduction announcement means the Fed will be buying fewer bonds going forward. This is the opposite of what the Fed did through Quantitative Easing where they purchased $120B worth of Treasuries and MBS every month. It is not yet truly clear what will happen to home loan rates once the process in June commences as the Federal Reserve has only once shrunk the balance sheet for a limited amount of time back in 2018.
"It's a strong economy and nothing about it suggests it's close to or vulnerable to a recession. We have a good chance to restore price stability (lower inflation) without a recession". Jerome Powell.
These words initially provided some comfort to both stocks and rates, but come Thursday, after sleeping on it, interest rates crept higher with MBS prices hitting 11-year lows and the 10-yr Note yield touching 3.09%.
Despite the Fed Chair saying the Fed is not considering a .75% rate hike, the markets finished the week assigning a very high probability the Fed will hike by .75% in June.
Bottom line: Home loan rates are at an important juncture. While MBS attempt to stabilize, there is a real threat they can go another leg higher and fast. If you are considering a purchase transaction, now is the time to lock.

Last Week in Review: Feb and Bond Market Are Quiet for a Change
This past week was a bit quiet as no Federal Reserve officials were talking to move the market. However, this changes next week, as we approach the highly anticipated FOMC (Federal Open Market Committee) Meeting. Let's discuss what to look for as we wait on the Fed.

Last week was the "quiet period," where no Fed officials talked about the economy or monetary policy seven days before the upcoming Fed meeting. The U.S. bond market embraced the quiet and lack of jawboning with rates improving slightly from the previous week.
Ironically, Fed President James Bullard recently said the "bond market was not a safe place to be"...and what we watched last week was the opposite. Amidst high uncertainty in Asia and an economic slowdown in China, investors around the globe sought the "safe-haven" of the U.S. Treasury market, which also helped home loan rates improve a bit.
The One Rate the Fed Can't Control
"There is an obvious need to move expeditiously to a more neutral level and more restrictive levels if needed to restore price stability," Fed Chair Jerome Powell, March 2022.
This quote from Fed Chair Jerome Powell at the March Fed Meeting highlights the Fed's desire to lift the Fed Funds Rate 2.00% or more from current levels. The Fed wants the short-term rate to be "neutral" where it neither helps nor hurts the economy.
The Fed can't control long-term rates like mortgages or the 10-year note yield which are influenced by inflation and economic growth. Until now, long-term rates have gone up solely on inflation fears and the tough talk of the Fed.
Next week, expectations are for the Fed to hike the Fed Funds Rate by .50%. This will have no impact on home loan rates. Much like 2018 when the Fed hiked rates a 4th time, mortgage rates improved dramatically as it was perceived the Fed was going to slow the economy too much with more rate hikes. Time will tell what the Fed will be able to do in this rate hiking cycle. There are heightened signs that the Fed won't be able to hike as much which includes U.S. economic growth slowing quickly from last year's pace.
Peak Signs
The 10-year note yield, currently at 2.84%, is below its peak of 2.98% seen on 4/20. If it remains beneath 3.0%, we will continue to see much-needed signs of stabilization in home loan rates. However, if the 10-year spikes again and moves back above 3.0%, we should expect home loan rates to move another leg higher.
The first read on Q1 2022 GDP showed that within the data, the inflation reading Core PCE (Personal Consumption Expenditure) continued to rise while growth fell 1.4% from the near 7% read in Q4 2021. Slow growth and high inflation paint an uncertain future.
Bottom line: Home loan rates are at an important juncture. While MBS attempt to stabilize, there is a real threat that rates can move another leg higher and fast. If you are considering a purchase transaction, now is the time to lock.

Last Week in Review: Smoke Signals Emerge

This past week, home loan rates touched the highest level in a decade as global bond yields were on the rise. Let's discuss some potentially positive signals for those looking for a rate peak as well as what to watch for next week.
The rate of change or the speed at which home loan rates have moved higher is historic. It has also elevated uncertainty and fear that rates will continue to skyrocket higher.
This past week, a New York Fed survey of renters believed mortgage rates will reach 8.23%...in three years. A dire forecast for rates that could only be achieved IF the economy is strong enough to sustain or absorb that sort of increase. Seeing that the housing market has stalled, to a degree, with home loan rates at 5.00%, it's probably highly unlikely we see rates move that high. This survey can be viewed as a potential contrarian indicator meaning...when so many people believe something will happen, the opposite generally happens.
Another potential contrarian indicator has emerged. U.S. bond outflows are surging. U.S. investors have sold or cashed in their mutual fund bond holdings at record levels in 2022. When retail investors or everyday people are all "fearful" and doing the same thing, like selling bonds, it often represents a sign the market is likely to turn, which in this case could mean a peak in rates could be upon us. Think about the psychology of everyone in the stock market with no fear – this is exactly the time when the stock market can turn lower. Hence, Buffet's other quote " Be fearful when others are greedy."
Gas tank, Food or Stranger Things
Netflix reported its first subscriber loss in more than a decade, when Wall Street was expecting the firm was to add users. The major reason for the stunning decline in users was soaring food and energy costs. The additional burden to put gas in the tank or food on the table has forced many to give up the service. The breaking news from Netflix is giving us early signs that consumers are feeling the pinch.
This brings into question, can the Fed hike rates aggressively as they have been saying? The Fed is in a unique position, because even if they raise rates, that will not help lower oil or energy prices, which is the main cause of inflation at this time.
Federal Reserve Getting Its Housing Wish
Last year, in front of Congress, Fed Chair Jerome Powell was pressured to stop buying mortgage-backed securities (MBS), to remove the "froth" out of the housing market. After the sharp increase in rates since November, we are starting to see signs of "froth" coming out of housing.
Redfin reported that 13% of online home listings lowered their price. This as Black Knight reported that affordability, as measured by mortgage payment versus monthly income, hit a 15-year low.
For affordability to improve, we need to see home price gains slow and for rates to remain at or beneath current levels.
Bottom line: Interest rates remain on the rise and the words of central bankers around the globe last week have added to the uncertainty and volatility. If you are considering a mortgage, now is an ideal time to lock as the path of least resistance for rates remains higher even though a peak could be near.

Last Week In Review: A Tale of Two Inflations

This past week, home loan rates hit the highest levels in nearly a decade as inflation readings came in touching 40+ year peaks. Let's discuss what happened and what to watch for.
Headline Consumer Inflation vs Core Consumer Inflation
Interest rates around the globe have been on the rise in response to inflation fears and uncertainty surrounding Federal Reserve rate hikes. The next Fed meeting is on May 4th and at that time the market is expecting a 0.50% hike in the Fed Funds Rate. Also on the table, is an announcement to start the balance sheet reduction, which could put more upward pressure on long-term rates.
The rate of consumer inflation will determine what the Fed will do going forward. On Tuesday, we received the important Consumer Price Index (CPI) Index. There are two inflation readings to follow, the headline figure, which includes food and energy costs, and the more closely watched Core reading, which strips out food and energy.
The headline CPI came in at 8.5% year over year. The important month-over-month reading, which determines the near-term trend, showed a higher than expected 1.2% increase or a 14.4% annualized rate!
The Core CPI reading came in at 6.5% year-over-year, driven by a relatively small 0.3% month-over-month rise. Both figures were cooler than expectations. In the words of Fed Governor Lael Brainard - this was a "welcome" sign.
The core inflation number is more closely watched by the Fed and the financial markets as that is the price of everything outside of food and energy. If core inflation continues to moderate in the months ahead, the Fed will not likely raise rates as aggressively as the markets currently fear.
Ironically, the headline and more energy-based inflation may be a reason why the core inflation number was lower. If people are paying more money to fill their tanks and heat their homes, it will come at the expense of all other purchases. How do these other products get purchased? Lower the price.
Consumer spending makes up two-thirds of our economic growth. So when you hear this fresh chatter regarding a recession in the U.S., it suggests the consumer will dramatically stop spending on items outside food and energy.
This could happen further down the road if we are unable to reign in energy costs.
Europe has Inflation Issues
Across the pond, European Central Bank (ECB) President Christine Lagarde shared these words which pushed interest rates higher around the globe:
There are "three main factors that are likely to take inflation higher" going forward.

1. Energy prices are expected to stay higher for longer.
2. Pressure on food inflation is likely to increase.
3. Global manufacturing bottlenecks are likely to persist in certain sectors.

Note: The similar theme abroad is the high headline (food and energy) cost while their economy slows from a lack of spending outside those items. The European economy is performing worse than the U.S. and their central bank is reacting even slower to inflation than our Fed. Their interest rates are 0.50% and there is no timeline to increase them. Additionally, the ECB will continue to purchase bonds to keep rates low until the 3rd Quarter of this year.
The good news? If rates stay low around the globe, it will help keep our rates relatively low.
Shortest Unemployment Line in 52 Years
Initial Jobless Claims are being reported at levels last seen in 1970. This is wonderful for housing as jobs buy homes. A potential problem could be wage-based inflation as it takes more money to attract talent.
The Fed's dual mandate is to maintain price stability (inflation) and promote maximum employment. We will wait to see if the Fed can perform a "soft landing" where inflation comes down without hurting the economy or labor market.
Bottom line: Interest rates remain on the rise. And the words of central bankers around the globe last week have added to the uncertainty and volatility. If you are considering a mortgage, now is an ideal time to lock in as the path of least resistance for rates remains higher.