re: July jobs report

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Waited too long to raise rates, now waiting too long to lower them

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Yup

They always do this

Crazy part is if yiu read this report the birth/death model.lied again and over stated jobs by like 240k (adp had like 107k) so this report would be negative jobs

The revisions will be glorious

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in February the market was ridiculously predicting 5-6 cuts this year alone.

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If the jobs numbers were not full of shite we would have had 5 cuts of .25 by now

So its not ridiculous. And a reduction of 1.25% still has us at a restrictive level

I dont understand the melt that inflation will soar if we get cuts

Yeah, I got laughed at back when they started raising rates for this very scenario. Late to the game and late to start easing which makes the recession worse than it had to be. all too typical for Fed actions

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Wouldn’t it make sense to wait until the rate cut happens and then lock in a lower interest rate theoretically?

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I believe when/if rates drop, you will see everyone get off the sideline which will cause the prices to increase.

They want the interest rate lower so we can service our national debt, as well.

We cannot handle slower GDP growth and high debt-service costs.

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I believe when/if rates drop, you will see everyone get off the sideline which will cause the prices to increase.

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Probably depends on if we have a deep recession or not. You could see home values go down with lower rates if unemployment and foreclosures spike way up.

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Can you explain this to me like I’m five? Why buy a house now?

Wouldn’t it make sense to wait until the rate cut happens and then lock in a lower interest rate theoretically?

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If you are comfortable with the house, price, and the payment you can get right now I would just buy. There are so many factors at play here that could take the market in different directions, and even if the general trend goes one way local markets can be different.

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If you are comfortable with the house, price, and the payment you can get right now I would just buy. There are so many factors at play here that could take the market in different directions, and even if the general trend goes one way local markets can be different.

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You can always refinance at some point. I've owned 2 homes but have had 6 different closings

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You can always refinance at some point.

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Yep. I don't like my current house payment but its manageable for a nice house and my wife still gets to stay home with the kids. My current mortgage on this house is $1500 more per month than the one I had on my first house up until we moved in 2020. Moved again last year and unfortunately got a 6.25 or 6.5 rate. No other debt though, so we will be golden once rates go down.

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The Fed said the UE rate is exactly what will cause them to move rates

Do the Job numbers not affect the UE rate?

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Unemployment is a signal they are using to help determine when they should start considering cutting rates. If UE moves up enough, fast enough then they can assume it represents a drop in the amount of consumers with disposable cash, meaning the value of the USD is likely to increase (read: inflation slow down) enough to warrant begin dropping rates.

But what happens if inflation comes in sticky at 3% or even rises back up to 3.1% or 3.2%? (unlikely, but for argument's sake) At that point they would be far less likely to cut rates at all in September because inflation would be moving counter to what they need regardless of Unemployment. Add some positive GDP into our hypothetical and it becomes a stagflation scenario where you literally can't cut rates without making inflation even worse.

Again, rates are raised or lowered to impact inflation and economic activity (GDP). If you are looking beyond that to add things to it or replace either of those for something else, you are over or under-thinking it.