It will take a long time to recover from a ‘tonic shift’ in global wealth

What Happened Before the Bell Newsletter: Stock Market Comeback after Red-Hot Inflation Measured Wall Street Phenomenology

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Markets plunged on Thursday morning after red-hot inflation data raised fears on Wall Street that the Federal Reserve would continue hiking interest rates aggressively. Then, something strange happened.

The stock market staged a huge comeback. The Dow Jones Industrial Average surged 1,500 points from peak to trough and the S&P 500 posted its widest trading range since March 2020, ending the day up more than 2%.

What is happening? The consumer price index, or CPI, rose 0.4% in September from the previous month, double the 0.2% estimate from analysts surveyed by Refinitiv. Inflation was up 8% on an annual basis.

The Fed can’t be happy about the report. The September meeting’s minutes show that officials are concerned about the economic outlook if inflation continues to rise.

So what explains the sharp divergence between markets and seemingly terrible inflation data? The stronger-than- expected inflation report could mean investors are betting that the price increases are near their peak. The market portrays how investors are grasping for information on what the Fed will do next.

The End of the Great Debt Crisis? Evidence for a Tectonic Shift in U.S. Household Wealth by 2022

Household wealth is on track for a reduction, according to a new report.

Global assets are set to decline by more than 2% in 2022, Allianz reports. That means households, on average, will lose about a tenth of their wealth this year.

The report paints a bleak picture. The 2008 financial crisis was marked by a relatively quick turnaround, but the current outlook shows stagnant growth in the future. The average growth of financial assets is expected to be around 4.6% until 2025, compared with 10.4% over the last three years.

The key to investing is that you can’t beat the Fed. So expect more good-is-bad economic news, since a strong monthly jobs report will likely continue to correlate to a weak market.

Disposable income fell from the spring of 2021 through the summer of 2022 as inflation outran wage growth and pandemic savings dried up. While American bank accounts are still fairly robust, consumers are borrowing more. In the third quarter of 2022, credit card balances jumped 15% year over year. That’s the largest annual jump since the New York Fed began tracking the data in 2004.

The takeaway: Allianz calls these changes a “tectonic shift” in global wealth that will take years to recover from. Today’s release of US retail sales for September will likely shed more light on the state of the consumer, as will earnings reports from some of the country’s largest lenders.

The Sixth Week in a Row Mortgage Rates Decline Revisited: The Tale of Two Economy — Mortgages, Inflation, and Housing Demand

Meanwhile, mortgage rates dropped again last week – the sixth week in a row – with the average 30-year fixed-rate mortgage falling to 6.27% from 6.31% the week before, according to Freddie Mac. A year ago at this time, the 30-year, fixed-rate mortgage was 3.05%.

The Federal Reserve embarked on a campaign of interest rate hikes in an effort to tame soaring inflation. Mortgage rates fell in November and December following data that showed inflation may have finally reached its peak, reports Anna Bahney.

Freddie Mac’s chief economist said that there are a tale of two economies in the data. “Strong job and wage growth are keeping consumers’ balance sheets positive, while lingering inflation, recession fears and housing affordability are driving housing demand down precipitously.”

A year ago, if you put 20% down on a $390,000 home and financed it with a 30-year fixed-rate mortgage at an average interest rate of 3.05%, you’d have a monthly mortgage payment of over $1,000, according to Freddie Mac.

Last year in the US housing market it was a roller coaster. Mortgage rates doubled and sales plummeted, triggering the longest month-to-month slump on record. A lot of would-be buyers and sellers watched from the sidelines.

The $9.99 a month Basic Plan of Netflix? An Analysis of the Second-Size Housing Markets after the Decline of the First-Timer Rate

The new option will feature much of what’s available with Netflix’s current $9.99 a month Basic plan, but will include an average of four to five minutes of commercials per hour. There are ads that will play before and during TV series and movies.

The company lost billions in market cap as a result of that news. Hundreds of employees were laid off, and doubts ran rampant about the platform’s future, raising questions about the viability of the entire streaming marketplace.

JPMorgan Chase

            (JPM), Wells Fargo

            (WFM), Citigroup

            (C) and Morgan Stanley

            (MS) report third quarter earnings before the bell.

“While a return to the 3.0% range is not likely in the near future, even a flattening of rates in the 5.5% – 6.0% range in 2023 would offer housing markets an improved foundation,” he said.

The US economy is expected to have added 200,000 jobs in the month of October, down from September’s 263,000 but still above the pre-pandemic average. The unemployment rate is expected to edge up slightly, to 3.6% from 3.5% — still close to a half-century low.

The new report showed that first-timers made up just 26% of buyers in the year ending in June, the lowest figure in more than 40 years.

“Mortgage application activity sunk to a quarter-century low this week as high mortgage rates continue to weaken the housing market,” said Sam Khater, Freddie Mac’s chief economist. “While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023.”

The current market is driving away would-be buyers, partially because there’s little inventory as Americans are uninterested in selling and parting ways with their ultra-low mortgage rates.

MBA estimates that a 25% to 30% decrease in mortgage industry employment from peak to trough will need to occur, given the decrease in production volume from the record levels in 2020 and 2021.

Fed Interest Rate Increases and the Future of the Economy: Predictions for Next-Generation Wall Street Rates in the U.S.

The central bank has already raised its benchmark interest rate by 3 percentage points since March, and it’s expected to tack on another 3/4 of a point at this week’s meeting. It’s the most aggressive string of rate hikes in a long time, but so far it hasn’t helped bring prices under control.

“Interest rates have risen at a whiplash-inducing speed, and we’re not done yet,” said Greg McBride, chief financial analyst at Bankrate. It will take some time for inflation to come down from these levels, even once we start to see some improvement.”

Throughout 2022, the Federal Reserve hiked its benchmark interest rate at a record pace to slow the economy and fight high inflation. Housing was the most interest rate sensitive sector of the economy. The Fed action led to declining sales and slower annual price growth due to the decline in affordability and demand.

“We see today that there is a bit of a savings buffer still sitting for households, that may allow them to continue to spend in a way that keeps demand strong,” said Esther George, president of the Federal Reserve Bank of Kansas City. “That suggests we may have to keep at this for a while.”

She is a member of the rate-setting committee of the Fed, and has expressed a determination to control inflation. But she’s also cautioned against raising rates too rapidly at a time of economic uncertainty.

“I have been in the camp of steadier and slower [rate increases], to begin to see how those effects from a lag will unfold,” George said last month. “My concern being that a succession of very super-sized rate hikes might cause you to oversteer and not be able to see those turning points.”

“We are deeply concerned that your interest rate hikes risk slowing the economy to a crawl while failing to slow rising prices that continue to harm families,” Sen. Elizabeth Warren, D-Mass., and colleagues wrote in a letter Monday to Fed chairman Jerome Powell.

The Spread Between Mortgage Bonds and Treasuries in a Wall Street Market: A Study of the U.S. Treasury Hypothesis Model

Shawn Woods’ company had sold a dozen houses a month before the Fed started raising rates.

“I wouldn’t have believed we would go from 3% to 7% in six months,” said Woods.

Mortgage rates tend to track the yield on 10-year US Treasury bonds. When that rate goes up, the 30-year fixed-rate mortgage typically goes up, too. When the Treasury rate goes down, so do mortgage rates.

The base rate is typically tied to the yield on a 10-year treasury note, which is used by most people if they want to move or refinance within a decade. The difference between the yield on those notes and the M.B.S., which are basically interest-paying bonds, is tied to a second rate. The difference is called the “spread” on Wall Street.

Reflecting the profits that players make in the mortgage chain is reflected in the amount of interest charged.

Many banks and other lenders don’t hold on to the mortgages they originate. They package them into bonds to sell to investors. The payments that homeowners make, including interest payments and prepayments, then flow through to those investors. Raising money from the sale of bonds allows mortgage lenders to make more loans.

The spread between Treasuries and mortgage backed securities isn’t very different during normal times. But that changes when interest rates rise, especially as swiftly as they have now.

Therefore, the spread — or the amount bond investors now expect to be paid compared with a Treasury note — widens. The spread has 888-405-7720 888-405-7720 The wider the spread, the more consumers pay because lenders pass on to them the cost of those increased rates.

The Realistic Story of Homebuying in 2020: Generation Z, Boomers and the Real Estate Market. The Case for a More Realistic America

That narrative was flipped on its head in 2020. The reason whyMillennials couldn’tafford homes in the suburbs was because they couldn’t afford them. When the mania for property began to grow, it was driven by a group of people in their 30’s who were finally able to find work after years of slogged away at jobs that they lost during the Great Recession.

(It also didn’t hurt that dizzying stock surges meant Baby Boomer parents with large investment portfolios were happy to pass on some of those gains to their darling Millennial kids.)

As that 2020 housing boom ends, those who closed on a home in the midst of competition should be extremely lucky.

For a historical comparison, the share of first-time buyers over the past decade has been between 30% and 40%. In 2009, in the middle of the Great Recession, it was high as 50%.

Jessica Lautz, the vice president of demographic and behavioral insights of the National Association of REALTORS, said that people are forced to save while paying more for rent as well as student debt. “And this year were facing increasing home prices while mortgage rates are also climbing.”

“The home price data released today do not account for the full impact of rising mortgage rates, which were above 7% early in November, and led to a significant pullback in buyer activity,” she said. “In many local markets across the country, home prices have fallen precipitously from their summer peaks as buyers were forced out of the market due to affordability challenges.”

It’s broken. I don’t purport to have a silver bullet, but it’s clear that inventory constraints and outdated zoning restrictions are a big part of the problem.

Rather than rebuilding within the neighborhoods, housing supply has expanded through subdivisions at the urban fringe. That’s putting more people and homes in environmentally vulnerable areas, such as wildfire-prone regions of the West.

As affordability reaches crisis levels, now is a good time for federal and local governments to rethink the way we frame the American Dream. But that will only happen if those who stand to benefit — Millennials and Gen Z — are better represented in elected office. Schuetz argues that the upper middle class Boomers are unwilling to change the system that got them to where they are.

Fed/ECB Rate Increases and the Economic Status of the UK, Europe, and the Outlook for Growth: Erik Lundh and the Conference Board

Hot on the heels of the Fed’s fourth-straight 0.75 percentage point rate hike, the Bank of England followed suit Thursday, raising its own key interest rate by the same amount — its biggest hike in 33 years. The European Central Bank did the same thing last week.

(Side note: “Basis points” are how central bankers talk about rate moves, which usually happen in tiny increments. One basis point = one-tenth of a percentage point.)

Ratiu said most recent indicators pointed towards a still-resiligent economy. The labor market remains tight despite the Fed’s efforts to cool the economy: Wednesday’s Job Openings and Labor Turnover Survey, or JOLTS, showed there were 11 million job openings in December, the highest since July.

The Fed would absolutely love for everyone to keep their jobs and just see some “softening” in the labor market — a slowdown in wage growth, say, or a drawdown in job openings.

Democrats trying to hold onto power next week are in a bad spot, as the pain of inflation is outweighing any optimism about job security. According to a new CNN poll, three-quarters of likely voters already feel like the country is in a recession.

The Conference Board has an economist namedErik Lundh. The opinions expressed in this commentary are his own. Read more opinion at CNN.

Buttressing the World of Mortgages: The 2008 Real Estate Bubble Has Tilted and Its End Has Solved Its Mistakes

But the housing bubble in the 2000s was underpinned by predatory lending, poor underwriting, adjustable-rate mortgages and rampant speculation. Americans were convinced that housing was a great short-term investment and that prices would only continue to rise. This famously turned out not to be the case.

Additionally, in the years that followed the 2008 financial crisis, new regulations were introduced. Banking standards have changed so that banks are required to be better capitalized, lending standards have changed to lead to higher-quality loans, and most mortgages are fixed-rate. This all buttresses the financial system from another housing downturn.

“Rates have declined significantly over the past six weeks, which is helpful for potential homebuyers,” said Sam Khater, Freddie Mac’s chief economist.

Additionally, Americans have more equity in their homes than they did leading up to the last financial crisis. Indeed, loan-to-value ratios, which measure the amount of a mortgage relative to the value of a home, for US mortgages have fallen to just 42% – a 12-year low. This creates a cushion so prices won’t fall below the loans that underpin them. Thus, if a home is sold at a loss, it’ll likely hit homeowners before it hits the banks.

Inflation, as measured by the Consumer Price Index, cooled considerably in November and was at its lowest level in nearly a year, according to the Bureau of Labor Statistics’ closely watched index, released on Tuesday.

The Rise of Mortgage Applications and Applications in the U.S. Real Estate Market and Implications for Lennar, a Home Buyer’s Market

Freddie Mac gets thousands of mortgage applications every year, which is the basis for the average mortgage rate. The survey includes only borrowers who put 20% down and have excellent credit. Many buyers who put down less money upfront or have less-than-perfect credit will pay more than the average rate.

What this means for real estate markets is that the continued cooling in inflation measures should ease the upward pressure on mortgage rates, said Ratiu.

There will be more movement in the market if mortgage rates drop, as he believes the tight inventory picture and strong unmet demand to buy a home suggests.

After a month of declines, mortgage applications ticked up last week as buyers looked to take advantage of several weeks of slightly lower rates, according to the Mortgage Bankers Association.

“Overall application activity declined last week, despite lower rates, which is an indication of the still volatile time of the year for housing activity,” said Joel Kan, MBA’s vice president and deputy chief economist. As the spring homebuying season is expected to get underway with lower rates and moderate home price growth, purchase activity is expected to pick up. The two trends will help buyers regain purchasing power.

A long list of housing data is on tap. On Tuesday the US Census Bureau will report housing starts and building permits figures for November, followed by Friday’s release of new home sales data for the same month. In between that will be existing home sales numbers from the National association of realtors on Wednesday, and weekly data on mortgage rates and applications on Thursday.

Still, there are some promising signs that the worst could soon be over. Shares of Lennar

            (LEN), one of the largest homebuilders in the US, rallied after reporting earnings last week. Analysts had expected revenue to be a little higher than expected, but the company was able to beat forecasts and give a better idea of how many homes it would deliver.

Kenneth Leon of CFRA Research says that investors may be looking ahead to 2023, crossing the valley from recession to potential recovery.

According to data from Amherst Group, an investment firm that buys single-family homes to rent out, it’s important to put the recent slide in prices in context.

It’s also worth noting that the job market is still strong and wages are growing. What’s more, many consumers still have decent levels of excess savings thanks to pandemic era government stimulus.

Even though housing sales may remain weak, the good news is that most existing homeowners are still paying their mortgage on time.

Again, that’s a stark contrast from 2008 when many people with subprime loans or borrowers with poor credit histories were unable to keep up with their mortgage payments.

“Housing is not bringing down the economy. Yes, the housing market has been affected. Gene Goldman is the chief investment officer at Cetera Investment Management.

There aren’t many companies reporting their latest earnings this week. More clues about the financial condition of consumers and the state of corporate spending can be found in the few that are.

Cereal giant General Mills

            (GIS) will release earnings on Tuesday. Analysts think there will be an increase in both sales and profit. Even though consumers are growing more wary of inflation, they still eat their Wheaties. This year, General Mills' shares have more than doubled.

The outlook for sneaker king Nike, used car store CarMax, and memory chip maker Micron are less optimistic than the analysts think.

Fourth-quarter earnings for the S&P 500 are expected to decline from a year ago, according to data from FactSet. Analysts have been cutting their forecasts. John Butters, senior earnings analyst at Factset, was able to point out in his report that fourth- quarter profits were expected to rise 3.7%.

The chances of a recession are high according to the chief economist. “That will have a knock-on effect for corporate earnings. Higher rates and weaker earnings suggest more pain for stocks.”

Friday: US personal income and spending; PCE inflation; new home sales; and US durable goods orders.

The Federal Reserve’s Failures to Fight Inflation: The Dow Slab as Evidenced by a Large-Scale Dow Decline

The Federal Reserve’s attempts to fight inflation is having only a limited impact on America’s economy, as evidenced by the fact that the Dow sank as America’s economy grew much faster than previously thought.

The GDP reading for July and September was posted on the Commerce Department’s website Thursday morning. That was above the 2.9% estimate from a month ago. Refinitiv had expected GDP to stay the same.

The report said the stronger-than-expected reading was due to increases in exports and consumer spending that were partly offset by a decrease in spending on new housing. Consumer spending is responsible for two-thirds of economic activity.

The stronger-than- expected GDP could prompt the Fed to raise rates more than expected in the years to come, as fears gripped US stocks on Thursday. The day began poorly for the stock market with the S&P 500 falling as much as 1.5%, but ended up with a 350 point loss for the stock market as a whole.

“The data was stronger across the board, and if there’s anything the Fed does not want to see these days, it’s better than expected data,” said Paul Hickey of Bespoke Investment Group.

The Federal Reserve is attempting to get the US economy back on a path to 2% inflation and it is sinking in, according to David Kotok, chairman and chief investment officer at Cumberland Advisors. Unless the Federal Reserve changes its policy, I can’t see how a recession will be avoided.


Confidence and Unemployment Insurance Rates in the Light of Low Interest Rates and Higher-Cost Mortgages: The December Results from a Conference Board

As many traders and investors are on vacation, each new data get overpolated in both directions, and this is one of the reasons the market is volatile at the moment.

The current level of interest rates have not impacted the spending plans of chief financial officers. Consumer confidence reached its highest level since April in December, according to a survey by the Conference Board.

Employers have continued to hire at a historically strong pace despite the fact that layoffs in some industries have increased.

Initial weekly claims for unemployment insurance benefits ticked up to 216,000 for the week ended, December 17. The previous week’s total was upwardly revised by 3,000 to 214,000.

Continuing claims, which include people who are collecting benefits on an ongoing basis, dropped slightly to 1.672 million for the week ended December 10. The number of continuing claims was revised up in the prior week.

“We just kind of got to that place in our lives where we were financially very stable, we wanted to start having kids and we wanted to just kind of settle down,” says Paul, 34.

“At first, we started lowering our expectations, looking for even smaller houses and even less ideal locations,” says Paul, who eventually realized that the high mortgage rates were pricing his family out again.

“There’d be, you know, two dozen other offers and they’d all be $100,000 over asking,” says Paul. “Any any time we tried to wait until the weekend for an open house, it was gone before we could even look at it.”

The Real Estate Market is Frozen, and the Mortgage Rates in Los Angeles are Down 25% to 20% in 2022, according to Lawrence Yun

Yun and others describe the market as frozen, one in which home sales activity has declined for 10 months straight, according to NAR. It has been a long time since the group started tracking sales.

And even as prices dropped 10% from the summer peak nationally, home values were still up by double digits from last year in 79 out of the top 150 largest metropolitan areas during November, according to

An open house for a nice starter home in Hollywood was held recently, but the agent was not able to see many of the people he saw a year ago.

Economists’ predictions range from prices rising by around 5% this year, according to, to as much as a 22% decline from the peak in 2022 to the trough, according to John Burns Real Estate Consulting.

He said more inventory would be made available when locked-in homeowners have their mortgage rates go back up.

Lawrence Yun is the chief economist of the National Association of Real Estate Advisers and he said that half of the country may see price gains. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10%-15%.”

Some markets like Manchester, New Hampshire, or Columbus, Ohio are still seeing homes change hands due to buyers from more expensive areas being drawn to local economies and median prices.

The median monthly mortgage payment decreased by 1.8% in November to $1,977 from $2,012 in October, according to the Mortgage Bankers Association.

After the 30-year fixed mortgage rate eclipsed 7% in late 2022, Yun said he expects that to settle at 5.7%, as the Fed slows the pace of rate hikes in response to slowing inflation.

Real Estate Market Dynamics and 2023 Outlook for Buyers in the First Three Months of the Property Sales Cycle – a Prospective Scenario

The first six months of the year can be somewhat difficult for buyers, but in the second half of the year, buyers can find more bargains, and that’s what we may see in 2023.

“The would-be buyers that stepped back from the market in late 2022 can’t and won’t stay away forever, especially given the competing demands from first-time buyers looking to get into the market and retirees looking to move or downsize,” Steinberg said.

Chronic under-building of new homes is also likely to remain a challenge across all market segments as builders grapple with balancing a short-term decline in demand with the long-term need for more new housing.

Tucker said that the spring market will be more competitive for buyers, and that the next two months will be calm.

The beginning of the year is usually one of the quietest periods in the real estate market, but this year is even quieter due to the high rates that are creating obstacles for buyers.

“With more than 10 million open jobs and still not enough applicants to fill them, the labor market would have to experience a sharp and significant drop to move the needle on spending,” he said. “This scenario is more likely if corporate executives overreact to the recession chatter and preemptively cut payrolls, which would create a self-fulfilling downward spiral.”

The traditional seasonal norms are expected to kick in around March when more inventory becomes available and more buyers start to look at what is available, so long as sellers are willing to give up low rates they enjoyed over the past couple years.

“We may have to wait until the start of the spring shopping season for more clarity on the direction of housing markets this year, especially as both buyers and sellers are pulling back from the marketplace,” he said.

The Fed and the Economy: Premarket Stocks Trading During the New Year with an Outlook to Next-Generation Rates in 2023

The new year is in the middle of a salad days, which can be a good time to feel positive about the year ahead. There’s a certain clarity that comes during this time in January.

The second in command of the International Monetary Fund, Gita Gopinath, told the Financial Times this week that the Fed should keep raising rates due to the labor market’s resilience.

Will wages moderate this year? Analysts at Goldman Sachs predict that they will. They believe that unemployment will grow and wage growth will slow from above 5% in 2022 to about 4% by the end of this year.

Brian Moynihan, the CEO ofBank of America, told CNN at the holidays that the continued strength of US consumer is helping to staving off recession.

But weaker-than-expected retail sales in November pummeled market sentiment last month and raised the odds that the Fed’s punishing interest rate hikes would push the economy into recession.

This is the main question on every investor’s mind which will determine what happens to markets this year, and whether the economy will fall into recession.

In the December Fed meeting, the central bank officials said that no policy makers anticipated that the rate would be lowered in 2023. The minutes warned that “an unwarranted easing in financial conditions … would complicate the Committee’s effort to restore price stability.”

And while officials welcomed softer inflation reports in recent months, they stressed that “substantially more evidence of progress” was required and said that inflation was still “unacceptably high.”


The Latest S&P CoreLogic Case-Shiller U.S. National Home Price Index Rises in November, and Freddie Mac’s Chief Economist Reveals Its Worst Ever

The home goods chain said in a regulatory filing that it may not be able to continue due to its worsening financial situation.

The Wall Street Journal reported that Bed Bath & Beyond is preparing to file for Chapter 11 within the next few weeks. CNN requested a comment from Bed Bath & Beyond.

US home prices dropped for the fifth month in a row in November, as rising mortgage rates pushed prospective buyers out of the housing market late last year and prices continued to cool, according to the latest S&P CoreLogic Case-Shiller US National Home Price Index, released Tuesday.

The national index had its first monthly decrease since February 2012 last July, and prices did not increase again for over a month until November.

The cities in the index reported declines before seasonal adjustments. After seasonal adjustments, 19 cities still reported declines, with only Detroit increasing 0.1%.

The S&P Case-Shiller US National Home Price index rose 7.7% in November from the same month a year ago, but it was less than October’s 9.2% increase.

The South accounted for all but one of the 20 cities in the index in November, with Atlanta and Miami reporting the biggest year-over-year gains. Miami led the way with an 18.4% price increase from the year prior, followed by Tampa and Atlanta. All 20 cities reported lower price increases in the year ending November 2022 compared to the year ending October 2022.

Bright MLS chief economist Lisa Sturtevant said the November report provides evidence of the slowing housing market, but it may not be the worst yet.

“This one percentage point reduction in rates can allow as many as three million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price,” said Sam Khater, Freddie Mac’s chief economist.

The effect of the Fed’s actions are keeping a floor under mortgage rates for the short term, he said, adding that he expects rates to stay around 6% for the next few weeks.

Housing economists and those in the mortgage market are looking to the next report on inflation, set to be released February 14, to see if the pace of price hikes continues to slow.

“For today’s buyer of a median-priced home, the down payment amount is lower than it would have been last summer,” said Ratiu. Affordability is a challenge for first time buyers.

Fed Fed Chairman Powell and Mortgage Rates in the First Four Months of 2019.0 to 1.96: The Rise of Mortgage Market Recession and the Impact on Mortgage Prices

Mortgage rates rose this week after four weeks of declines, as a stronger-than-expected jobs report suggested the Federal Reserve would continue hiking its benchmark lending rate in its battle against inflation.

Speaking at the Economic Club of Washington on Tuesday, Federal Reserve Chairman Jerome Powell said the resilient economy means the central bank “may have do more and raise rates more than is priced in.”

The tension between expectations and economic data will continue to seep through financial markets for several more months, said George Ratiu,’s manager of economic research.

Even with rates trending down since November, they are nearly double what they were a year ago and mortgage applications are down 58% since then, according to the Mortgage Bankers Association.

Bob Boreksmit, president and CEO of the Mortgage Bankers Association, said that affordability is a challenge, but he expects purchase demand to recover heading into the spring.

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