This week the Federal Reserve cut its short-term interest rate policy by half a percent to 4.75%-5.00%, marking an end to a two-year effort to recoup some of the excesses in Covid stimulus.
Historically, mortgages have cost around 1.75% more than the benchmark 10-year Treasury note. Today, that spread is around 3.00%. That’s huge and likely not going to last. Something’s going to give—or break.
Bottom line is it seems prudent not to bet on a soft landing consensus that might only exist in a time with lots of hope, denial, and jobs available everywhere.
