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Federal Reserve to increase interest rates by 75 basis points for the third time

federalreserve.gov

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Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#181

Post by colinmhayes »

greatpostman wrote: post #95
JamesBarney wrote: post #60

Earlier quoted context omitted.

People get this backwards all the time. The fed did not cause cheap money, an aging population, sovereign wealth funds, and increasing inequality caused cheap money. The fed just responds by setting the interest rate to appropriately set the interest rate so we have full employment.

This is an insane assertion. The fed has made consistent huge mistakes in monetary policy. No serious investor or public financial figure thinks these cheap rates were necessary

This is an insane assertion, if only because the Fed is run by public financial figures.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#182

Post by digianarchist »

11101010001100 wrote: post #147
digianarchist wrote: post #139

Earlier quoted context omitted.

My RSUs are down 70% from their post IPO peak.

question: is it illegal to setup a hedging instrument for this sort of thing?

Illegal? Not sure. I'm forbidden from shorting our own stock by internal policy.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#183

Post by lamontcg »

maxfurman wrote: post #14

I'll echo what some folks have said in other threads, we've had rates down near zero for fifteen years, and we've got to get them back somewhere near historic normals at some point. If only so they can be cut again during the next crisis. How much is our entire culture the result of cheap money?

This is going to generate a recession though which will drag down long interest rates, and they'll slash short rates in a panic and we're back at groundhog day again.

If you want persistently higher long interest rates then you want persistently higher inflation expectations.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#184

Post by theptip »

jejeyyy77 wrote: post #173
ryandrake wrote: post #99

Earlier quoted context omitted.

Prices are not dropping, but sales are drastically slowing down and properties are staying on the market for longer. At least in the Bay Area, a few months ago it was unheard of for a home to stay on the market a month. Now they're sitting there. Definitely think rates are affecting how much buyers are willing to spend.

Slowing sales could be the result of low inventory. That is, sellers are not eager to list/sell. Everyone is waiting and seeing.

Right, it's a terrible time to take on a new mortgage, so there is a strong disincentive for owners to sell at this time.

If you're on a fixed-rate 3% mortgage that loan is looking extremely valuable vs. the best rate you can get right now.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#185

Post by colinmhayes »

plandis wrote: post #45
dougmwne wrote: post #13

Given that mortgage rates recently rose past 6%, seems to me this latest rate increase is going to put strong pressure on house prices. The rate has a huge impact on the monthly payment required to service a loan, more so than is immediately apparent without doing the math.

Good time to buy if you’re wealthy with cash on hand.

The biggest advantage of real estate investing is the easy access to cheap, reliable leverage. This is absolutely not a good time to get into a business that requires debt 4x higher than equity to make money.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#186

Post by toast0 »

bombcar wrote: post #103
unethical_ban wrote: post #76

Earlier quoted context omitted.

Mortgages can be refinanced at a lower rate when the market allows, correct?

Correct, however there are costs associated with refinancing (either "built in" or upfront) and in some cases the refinanced loan has fewer protections. For example, a purchase loan in California is non-recourse, but a refinance is not. However, you can get "trapped" as I did if you bought near a high point, and then interest rates and prices dropped, and since I was now "underwater" I couldn't refinance, even though…

> For example, a purchase loan in California is non-recourse, but a refinance is not.

That's not the case for refinances after Jan 1, 2013.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#187

Post by bryanlarsen »

greatpostman wrote: post #124
bryanlarsen wrote: post #118

Earlier quoted context omitted.

We live in a world that is awash in capital because old people & rich people have a large amount of capital. When the supply of something is high, the price goes down. And the price of capital is interest rates.

The excess liquidity comes from low rates. No serious financial investor thinks otherwise

$6T of QE is about 1/10th the size of the US bond market and 1/20th the size of the US stock market.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#188

Post by lamontcg »

markus_zhang wrote: post #3

I'm wondering if they are going to bite the bullet and raise like Volcker. But again I realized that I actually do not understand the source of inflation and how much contribution each source has. We all know that the war, Covid and monetary policy are three sources but are there other structural sources? What about the trade quarrel between US and China? How much does it hurt for each industry? I should read some pa…

Retiring boomers and an aging population along with disability due to long COVID are leading to not enough workers. That is leading to wage inflation along with unionization since the workers currently are holding more of the cards.

That is the bridge too far for the Fed so they're cracking down like Volker. They didn't care about housing prices, rents, college tuition, the commodities inflation in 2010-2014, etc. Normal jobs like working in a restaurant are seeing wage inflation now and that can't be tolerated.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#189

Post by latchkey »

jejeyyy77 wrote: post #173
ryandrake wrote: post #99

Earlier quoted context omitted.

Prices are not dropping, but sales are drastically slowing down and properties are staying on the market for longer. At least in the Bay Area, a few months ago it was unheard of for a home to stay on the market a month. Now they're sitting there. Definitely think rates are affecting how much buyers are willing to spend.

Slowing sales could be the result of low inventory. That is, sellers are not eager to list/sell. Everyone is waiting and seeing.

A buddy of mine ended up renting out his condo right next to Dolores Park (ie: pretty great location in SF) after it sat on the market for a few months (including lowering the price). It rented immediately. Places are not selling.

Re: Federal Reserve to increase interest rates by 75 basis points for the third time

#190

Post by frumper »

jejeyyy77 wrote: post #173
ryandrake wrote: post #99

Earlier quoted context omitted.

Prices are not dropping, but sales are drastically slowing down and properties are staying on the market for longer. At least in the Bay Area, a few months ago it was unheard of for a home to stay on the market a month. Now they're sitting there. Definitely think rates are affecting how much buyers are willing to spend.

Slowing sales could be the result of low inventory. That is, sellers are not eager to list/sell. Everyone is waiting and seeing.

Low inventory is why they were going in a couple days.
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