Market Bets on Interest Rate Cuts
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Market Bets on Interest Rate Cuts
Summary:
Recent weaknesses in the international stock market have surprised investors, fueling expectations that the Federal Reserve will cut interest rates.Article:
Amid mounting concerns over the international stock market's downturn, investors are increasingly confident that the Federal Reserve will embark on a series of interest rate cuts. This sentiment follows last week's disappointing job report and growing worries about economic fragility, attributed more to cautious business sentiment than consumer behavior.
Experts suggest that while consumer demand remains robust, helping sustain a 2 percent growth rate, it's the business sector that is apprehensive. The August loss of 4,000 jobs?"marking the first decline in four years?"indicates that the Federal Reserve may be overdue in lowering rates. Peter Morici, a business professor at the University of Maryland, commented, “There is fear out there. But we are likely to see strong productivity as employers hesitate to hire.”
The yield on 10-year Treasury notes fell by 14 basis points last week, hitting 4.37 percent, a low not seen since late 2006. The ongoing credit crunch persists, with institutional investors pulling back from various securities, and the subprime mortgage market in dire straits.
An economist noted a record high in property seizures due to unpaid mortgages in the second quarter, and even prime borrower defaults have surged to levels reminiscent of the 2001 recession.
The standard three-month London Interbank Offered Rate (Libor) was about 5.72 percent late last week, up 36 basis points in recent weeks?"its highest since early 2001. Libor affects global short-term borrowing costs and adjustable-rate mortgages in the U.S., with its rise causing mortgage rates to increase despite a decline in longer-term mortgage yields.
The elevated Libor rates also indicate a tightening in monetary policy, as banks are less inclined to lend to one another?"a concerning sign.
All eyes are on the upcoming Federal Reserve meeting. Key U.S. economic indicators expected this week include the trade deficit and the ABC News consumer confidence index today; the Mortgage Bankers Association's mortgage application data tomorrow; initial jobless claims on Thursday; and on Friday, import prices, retail sales, industrial production, capacity utilization, and business inventories.
In Canada, data to be released this week includes housing starts, the new house price index, and the international merchandise trade surplus tomorrow; industrial capacity utilization on Thursday; and manufacturing shipments and labor productivity on Friday.
You can find the original non-AI version of this article here: Market Bets on Interest Rate Cuts.
You can browse and read all the articles for free. If you want to use them and get PLR and MRR rights, you need to buy the pack. Learn more about this pack of over 100 000 MRR and PLR articles.