It’s Bill Rapp, the Mortgage Viking here, let me tell you about what the Good Ole Boys on Wall Street are talking about today…
Federal Reserve Vice Chairman Richard Clarida continued with the dovish commentary coming from Fed officials and left open the possibility the Fed will raise interest rates in 2019 fewer than the two times currently projected. “He emphasized that Fed’s flexibility extended not only to rates, but also to the ongoing balance sheet reduction program, which also tightens financial conditions over time.
Clarida’s remarks stayed in line with the cautious message Fed officials have delivered over the past two weeks, compared to the more hawkish tone they set with their Dec. 19 policy statement and forecasts for further rate hikes in 2019 that sent equity markets into a tailspin.
Despite the median projection of two rate hikes, my call continues to be that the Fed won’t hike rates in 2019 and that the next move will be a rate cut in 2020, a view that is shared by the market.
Of course, the ongoing US government shutdown could impact the sentiment surveys, so investors will be looking for signs of that.
It has been quite the start to the year for risk assets as the S&P 500 and the Bloomberg Barclays High Yield Corporate Bond Index each up 3% to start the year.
While fears about corporate leverage have been dominating headlines in recent weeks, the rally in credit suggests little stress currently.
This is Bill Rapp, the Mortgage Viking, and please do not forget to subscribe and share this post if you found it useful!
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