Fed expected to hold this week as election jitters slow housing, Cohn says
“It’s quite likely that the Fed will do nothing next week. It’s a week before the election. They’re facing a massive conundrum: a major equities meltdown, weaker economic data, and oil prices that keep rising. I think that if oil prices continue to soar, then the Fed should be raising rates in December,” Cohn said.
Market reports show a more mixed picture than “meltdown” suggests. Tech stocks sold off sharply Thursday. By Friday’s close, according to Reuters, the S&P 500 and Nasdaq were on track for modest weekly losses, while the Dow was slightly higher. Oil rose again Friday and is trading above $100 a barrel, market recaps show. Initial jobless claims fell to 194,000 in the week ended Oct. 17, a sign of labor-market resilience.
Rates and buyer hesitation
Cohn described a housing market under strain.
“The housing market is imploding. Mortgage rates are at a point where people just can’t afford to buy, and new-home sales activity is diminishing each week. You keep reading about how the real estate market’s going into a deep freeze. The prices haven’t dropped enough to compensate for the higher interest rates; mortgage rates are higher than they were earlier this year, and it’s impacting affordability,” she said.
Freddie Mac’s survey put the 30-year fixed rate at 7.40% on Oct. 15. The monthly average was 6.07% in February. The Mortgage Bankers Association estimated September new-home sales at a seasonally adjusted annual rate of 584,000, the slowest since April 2020. New-home purchase applications fell 8% from August.
