United States stocks post weekly gains amid Fed's interest rate hike, positive data

21 March, 2017, 01:52 | Author: Leticia Walters
  • Federal Reserve Chair Janet Yellen The Fed's dot plot is finally resonating with investors

"Given continued solid job growth and recent income gains, we believe this pace of rate increase will not derail the ongoing housing recovery".

"The unemployment rate has been stuck around 4.7 percent".

This might seem daunting, at first, but NerdWallet mortgage analyst Tim Manni confides: "For consumers now shopping for a mortgage to purchase a property or refinance an existing loan, shouldn't feel like a real shock to the system since the rate move has already been "baked" into the market".

In an interview on CNBC's "Squawk Box", Minneapolis Fed President Neel Kashkari said he voted against the rate hike because inflation is still below the central bank's 2 percent target. The move represents the first of what central bankers see as a total of three rate increases for 2017, a projection that did not change at after last week's meeting.

The Fed's latest statement reassured markets that President Trump's rhetoric about imminent tax cuts and massive fiscal-policy stimulus have not caused it to accelerate its rate-hike timetable. The Fed's preferred gauge of price pressures, excluding food and energy, rose 1.7 percent in the 12 months through January, still a bit shy of its 2 percent goal.

In a piece for HousingWire, he writes that the Fed's actions might actually be good for the housing market. Instead, both US and Government of Canada (GoC) bond yields traded lower after the announcement and this allayed fears that another round of fixed-mortgage rate increases might be imminent. The Bank of Canada (BoC) wants the Loonie to weaken against the Greenback in order to provide a boost to our beleaguered export sector, so the falling Greenback should make the BoC incrementally more dovish in its own right. Five-year fixed-rate mortgages are available at rates as low as 2.44% for high-ratio buyers, and at rates as low as 2.49% for low-ratio buyers. Indeed, McBride comments, "Borrowers with adjustable rate mortgages that are seeing their rates reset should brace for higher payments".

The FOMC had previously raised the federal funds target rate to a range of 0.5 to 0.75 percent last December.

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