Housekeeping - Watch our recent discussion on big cuts in our mortgage rates. Also, sign up for an interview I am hosting tomorrow with Hotel 101, an investment opportunity to own a hotel room in Niseko and Madrid.
A cut in the Fed Funds rate is nearly 100% expected now, and the discussion is if the cut is 50 bps or, dare I say it, 75 bps.
The main takeaway from my perspective of Powell's speech at Jackson Hole was the emphasis on unemployment vs inflation. His comments were very dovish.
The FOMC expects unemployment to be 4.0% in 2024 and 4.1% in 2025.
If we see the labor market soften below expectations (which we will) - the Fed will cut more aggressively post-September, given the lag effects.
According to Steno Research, forward pricing of the FOMC's rates is approaching a 3% equilibrium. That is to say, there are bets being placed for rates to be at 3% next year!
Personally, I think we may see a 100-150 bps cut over the next 6 months - you heard it here first!
In China, the lack of credit growth is becoming a problem. Chinese are rational and are culturally savers. Watch this space.
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