It was a jam-packed week with the FOMC rate decision and the first report on Q2 GDP.
The bond market rallied after the Fed raised the policy rate, the Fed Funds, by 75 basis points.
This brought the 10-year Treasury Bond below the 2.75% resistance level, ending the week right around 2.65%.
The yield curve has been inverted across different parts of the curve for months. This is a very strong predictor of recession and just prior to The Fed announcement the 2-year and the 10-year was inverted more than 30-bps.
Speaking of recession, an advance GDP report on Thursday showed the economy contracted again in quarter 2.
The -0.9% drop marks two consecutive quarters of negative GDP, which is considered an official recession.
After the rate hike announcement and the GDP report the ongoing bond market rally which started a month ago picked up further momentum and as a result mortgage rates dropped to the lowest level in nearly 3-months.
How can mortgage rates drop if the Fed is hiking rates?
Tune in for this week’s episode to find out, and to hear an explainer on why mortgage rates do not actually drop but instead lower rates merely become less expensive.
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Welcome to the MORTGAGE GURU PODCAST, where your host Jon Kutsmeda covers the topics that matter most to homeowners and real estate investors without the industry jargon.
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