patrick.net

https://finance.yahoo.com/news/fed-seen-aggressively-hiking-5-090000581.html

Fed Seen Aggressively Hiking to 5%

zzyzzx says

https://finance.yahoo.com/news/fed-seen-aggressively-hiking-5-090000581.html

Fed Seen Aggressively Hiking to 5%

Yeah, the Federal Funds rate is likely to reach 5% by March 2023. Its virtually guaranteed to reach 4% in November, as it is increased from currently 3.25%. And they likely will increase it to 4.5% in December or January.

If inflation starts to drop from currently 8.2% to below 5% by February next year, then I could see the Fed holding rates around 4.5%.

When inflation holds steady around 3% to 4.5% then I see the 30 year mortgage steadying around 5.5%.

The 30 year mortgage rate has to stabilize and be no more than 5.5% for housing sales or liquidity to not freeze up in 2023.

Its all based on inflation or CPI eventually steadying below 5% as interest rates charged by banks are dependent on inflation.

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https://www.investopedia.com/goldman-sachs-boosts-rate-outlook-to-5-6823502

Goldman Sachs Boosts Rate Outlook to 5%

zzyzzx says

Goldman Sachs Boosts Rate Outlook to 5%

" Goldman Sachs economists said they expected the central bank will lift its benchmark rate to a range of 4.75% to 5% in March, 25 basis points more than earlier expected. The projection assumes an increase by 75 basis points this week, 50 basis points in December, and 25 basis points in February and March. The economists cited three reasons for the Fed hikes beyond February, including “uncomfortably high inflation,” the need to cool the economy, and to avoid a premature easing of financial conditions. "

What happens if the November or December CPI are below 6% ? Do they still cut rates in early 2023 ?

I would expect they increase the Fed Funds rate to 4.25% and hold steady for the first three months of 2023 if that is the case.

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One POV is that inflation will continue, and that the interest rate increases will slow down the economy, possibly leading to a recession. STAGFLATION.

The actions of the Fed are compared to steering a car using the rearview mirror.

November 2, 2PM EDT. Stay tuned.

ad says

What happens if the November or December CPI are below 6% ?

Interesting question, but not very likely to happen.

Lately I am wondering if after the Democrats' wipeout; will the Federal Reserve stop raising rates?
I was just thinking since they will be wiped out so badly the Fed people will not feel any political pressure; "you assholes lost all on your own, not our problem."
So, perhaps the Federal Reserve will continue to raise rates; that is going to suck for guys like me.
OH WELL. Time to kick back in Baja and do some more diving/beaching/exploring/eating/etc.

https://finance.yahoo.com/news/fed-set-to-raise-rates-powell-rate-hike-path-101845316.html

Fed again raises interest rates by 75 basis points

Weak!

Shit, I hope they stop raising rates.
Inflation will stop itself if Congress would just stop giving money.
I am not in favor of the 8.7% raise in Social Security either. It's nonsense.
I predict that the Fed will lose its nerve after next week's elections.

The Fed Funds rate is now at 4%. I can see them increasing it to 4.25% this December unless inflation or CPI drops below 5.5%.

I would not be surprised if they decide to raise it to 4.5% this December if CPI for November remains above 7%.

They are not too far off from peak 2007 interest rate levels.

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ad says

The Fed Funds rate is now at 4%. I can see them increasing it to 4.25% this December unless inflation or CPI drops below 5.5%.

I would not be surprised if they decide to raise it to 4.5% this December if CPI for November remains above 7%.

They are not too far off from peak 2007 interest rate levels.

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I thought they make a decision every 3 months, not every month.

clambo says

Inflation will stop itself if Congress would just stop giving money

Is there any doubt in your mind that they (and Biden) are going to continue to spend like the proverbial drunken sailor?

GNL says

ad says

The Fed Funds rate is now at 4%. I can see them increasing it to 4.25% this December unless inflation or CPI drops below 5.5%.

I would not be surprised if they decide to raise it to 4.5% this December if CPI for November remains above 7%.

They are not too far off from peak 2007 interest rate levels.

...
I thought they make a decision every 3 months, not every month.

GNL, they are meeting this December. But I agree with what you stated as I thought also they only meet quarterly in regards to interest rate decisions.

"Often it comes down to a few words in the Federal Reserve’s press release. With its November statement, the Fed has offered an early signal that we may be getting closer to peak interest rates of around 5%. The Fed anticipates moving toward smaller rate hikes either in December or at the subsequent meeting in February 2023. However, Fed Chair Jerome Powell did indicate at the November press conference that it was “very premature” to be talking about a pause in rising rates. We’re not there today."
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https://www.forbes.com/sites/simonmoore/2022/11/02/why-the-feds-december-meeting-may-help-signal-peak-interest-rates/?sh=7f5650d73acf

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https://finance.yahoo.com/news/world-plunging-towards-societal-collapse-154000368.html

World ‘plunging towards societal collapse’ as era of cheap money ends

zzyzzx says

https://finance.yahoo.com/news/world-plunging-towards-societal-collapse-154000368.html

World ‘plunging towards societal collapse’ as era of cheap money ends

Its just an adjustment or almost a reset. When accounting for inflation, the S&P 500 has about a 5% negative return since February 2020. Housing may take about 2 to 3 years to adjust as well.

I see a lot of the homes converted to vacation rentals or AirBnB homes will start to lower their rates also as part of this adjustment.

Let's just hope the 22 to 35 year old population who gets laid off can handle this and pull themselves by their bootstraps. This may mean temporarily working 2 part time jobs, in order to make ends meet as well as continue to get back into a similar job.

I remember 2001 and 2008 and they were hard times as far as layoffs. But it seems this time that the population in general is fragile compared to back in 2001 and 2008.

At least we likely won't see a deflationary spiral. Perhaps at worst we get mild amount of stagflation.
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ad says

At least we likely won't see a deflationary spiral.

You wrote "deflationary spiral" as if it were a bad thing...

https://www.reddit.com/r/Economics/comments/ymspxe/summers_sees_risk_fed_needs_to_hike_past_6_to/

Summers Sees Risk Fed Needs to Hike Past 6% to Curb Inflation

https://finance.yahoo.com/news/october-consumer-prices-inflation-data-cpi-november-10-210744752.html

October CPI: Inflation moderates, rising at annual 7.7% over last year

The Consumer Price Index (CPI) in October reflected a 7.7% increase over last year and 0.4% increase over the prior month, the Bureau of Labor Statistics said Thursday. Economists had expected prices rose at an annual 7.9% clip and 0.5% month-over-month, per Bloomberg consensus estimates.

CPI was 8.2% (for last 12 months) for September 2022. With October 2022's CPI of 7.7%, this is a good sign and trend given that June 2022's was 9.1%.

So annual inflation or CPI has been slowly trending down. I suspect though the Fed will still raise the Fed Funds Rate in December from 4% o 4.25% at least.

All the tech stocks from Meta, Google, Amazon, and Apple are up a lot today. Never seen it go that krazy krazy. AMD is unreal today also.

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I follow the W5000 and it had a good bounce today.

Fed's Powell: "You are all worthless and weak!"

Federal Reserve Chairman Jerome Powell will speak about the economy and the labor market on Wednesday, Nov. 30, only two days before U.S. central bank officials stop talking publicly to prepare for their mid-month policy meeting.

https://www.marketwatch.com/story/feds-powell-to-speak-on-economy-on-nov-30-two-days-before-blackout-2022-11-18

https://finance.yahoo.com/news/mortgage-qualifying-rate-canada-may-184048144.html

Mortgage-Qualifying Rate in Canada May Top 8% After Latest Central Bank Hike

High interest rates create strong men because high rates create/support conservatism.

https://www.bloomberg.com/news/articles/2022-12-09/fed-s-peak-rates-for-longer-seen-dashing-hopes-for-2023-cuts

Fed Expected to Keep Peak Rates for Longer, Dashing Hopes for 2023 Cuts

No rise?

https://www.cnbc.com/2022/12/14/fed-rate-decision-december-2022.html

Fed raises interest rates half a point to highest level in 15 years

zzyzzx says

https://www.cnbc.com/2022/12/14/fed-rate-decision-december-2022.html

Fed raises interest rates half a point to highest level in 15 years

Why would they talk about lowering rates in 2024 and 2025? Amazingly they can see that far ahead concerning lowering rates but not that far ahead when raising rates is needed?

The screaming souls mourning their lost equities ring in the ESP verse.

Volker above created sky high interest rates.

zzyzzx says

Will it work?

13 States are increasing the minimum wage in 2023. This will drive up wages among the entire population without increasing output.

Whaddya think is going to happen?

GNL says

Will it work?

If they do a 50 basis point rise every month of 2023, it might. The fed also needs to sell off all it's mortgage backed securities.

Misc says

13 States are increasing the minimum wage in 2023. This will drive up wages among the entire population without increasing output.

Whaddya think is going to happen?

Only if the minimum wage is higher than the current prevailing bottom wage. For example, the minimum wage in VA is now $11/hr, yet Target, McDonalds et al are starting people at $15/hr.

https://finance.yahoo.com/m/d373673e-a093-3af0-bb42-b5fe65ac2cf3/the-fed-needs-to-jack-rates.html

The Fed needs to jack rates up by 10% right now

https://finance.yahoo.com/news/inflation-isnt-coming-down-without-162416982.html

Inflation isn't coming down without a recession and interest rates will continue to skyrocket, JPMorgan Asset Management investment chief says

The bank's chief investment officer said prices would only cool if the labor market weakens and predicted interest rates would top 6%.

Misc says

13 States are increasing the minimum wage in 2023. This will drive up wages among the entire population without increasing output.

Where's @Patrick with his chart about productivity and wage increases?

Wages are way behind productivity gains for about 50 years, there's plenty of room for wage improvement.

Plus we had decades of low interest rates and money printing, so capital is definitely not the problem.

There is massive disillusionment in the workforce and rightly so. Wages have not kept up with inflation, to buy a house they are looking at near record low affordability, about 40% carry a balance on their credit card and that balance keeps rising and companies long ago stopped promoting from within.

What does the workforce do??

Productivity is down 4.1% on an annualized basis, the biggest decline since the government started keeping track of the number back in 1948. --- Oct 7, 2022

The Fed wants to increase unemployment in an environment where there are not enough workers. That'll just stress out those that are already overworked even more. The country is headed for that great socialist paradise that many counties have failed into.