Fed indicates next move
Posted August 31, 2012
Fed rhetoric was the focus Friday morning, and for those of us in housing, Big Ben’s words did not disappoint.
While we did not receive an exact delivery date for policy execution, it seems that it’s now all but certain that the Fed will be stepping in over the next month or two with additional stimulus.
The Fed Chairman had quite a few nuggets of insight for the markets relating to the justification behind additional easing. He mentioned that stagnation in the labor markets is of “grave concern” to the Fed. He highlighted the fact that current economic headwinds provided support for keeping rates low for longer. He also stated that “non-traditional tools have proved effective,” and that he wouldn’t rule out more asset purchases.
The markets had a mixed reaction to his comments. However, the Treasury world gave housing a boost by driving prices up and lowering the 10-year yield to 1.55 by the close of day Friday.
Triangle housing will certainly be able to maintain its momentum as we head into the fall thanks to the current rate market. My hope is that economic fundaments will continue to be strong as well.
The University of Michigan’s Consumer Sentiment Report was also released on Friday, indicating that while consumers are feeling a bit more confident according to its monthly reading, there is still much skepticism regarding the long term fundamental strength of the economy.
U.S. Markets are closed Monday for the Labor Day holiday. Have a wonderful holiday weekend everyone!