It’s a combination of four things:
- The S&P Global Manufacturing report showed the economy running hotter than expected, triggering expectations for more policy tightening.
- Comments on inflation regarding average input costs for goods and services, which surged higher (oil) hit their highest level since 2022.
- Comments from Iran’s President at the UN, which were inflammatory.
- Fed Governor Michael Barr also contributed to the bond selloff, stating that further rate hikes are likely to be needed.
Suffice to say, it was a bad day yesterday, and today is shaping up to be the same.
Some good news: New Home Sales, signed contracts on new homes rose 6.4% in August, with an annualized rate of 684,000, much stronger than the 620,000 estimate.
Part of this may be due to builders incentivizing buyers with massive rate buydowns and lower prices to move inventory.
If rates remain high, a lot of buyers will stay on the sidelines. Inventory is up, and most markets are softening, meaning there are opportunities to snag a great home at a fantastic price, which can help offset higher interest rates.
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