On the heels of the Fed raising interest rates, here is Peter Boockvar’s take on the Fed’s rate hike.

A Game Of Semantics
September 26 (King World News
) – Here is a portion of what Peter Boockvar wrote today as the world awaits the next round of monetary madness:  
Along with the rate hike, the FOMC statement was mostly identical to the one given on August 1st. They did take out this line however, “The stance of monetary policy remains accommodative.” This even though today’s rate hike only takes the REAL fed funds rate to ZERO…


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It’s semantics anyway because most still want to hike rates again in December (12 of 16 members) and three more in 2019. The median long run funds rate ticked up to 3% on average from 2.9% in the last forecast but the median target of 3.1% in 2019 didn’t change and looking past 2019 is a waste of time.

They raised their 2018 GDP forecast to 3.1% from 2.8% and raised their 2019 estimate to 2.5% from 2.4%. For some reason, the median unemployment rate actually ticked up by one tenth to 3.7% from 3.6% but then miraculously falls back to 3.5% next year. Go figure. And magically, their 2018 PCE core forecast remained at 2% and is at 2.1% next year.

Bottom line, markets seem to be honed in on the Fed taking out “accommodative” but as I said it’s just a game of semantics because their rate hike path did not change and in fact, they just reinforced that another hike is coming in less than two months.

UPDATE: Jay Powell just confirmed my point that taking out the word “accommodative” was semantics by just saying in the press conference that eliminating it from the statement meant nothing for the path of policy. Bond yields are exactly where they were just prior to the release of the statement.

30 Year Mortgage Rates Near 5%
With the average 30 yr mortgage rate jumping by 9 bps w/o/w, a rather large one week move to 4.97%, the highest since 2011, it actually stimulated activity as people rushed to lock in while they can.

Applications to purchase a home rose 2.6% w/o/w and are up 4% y/o/y. Refi’s rose 3.2% w/o/w but still remain down 35% y/o/y. We see new home sales today for August and will come after the July print that was the lowest since October 2017 as high prices and rising rates have clearly tempered the pace of transactions.

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