May 22, 2023
Medium and long term rates have moved up about 25-30 bps but short term rates have gone up a bit more. The one month bill got as low as 3.40% but then skyrocketed to nearly 5.70% today. If you have a loan that adjusts monthly, you’ve likely seen the volatility in your rate The Fed increased rates by 25 bps on May 3 and their next meeting is mid-June. They are data dependent but the consensus is that they will finally pause in June. The regional bank issues have been pushed to the back and the increase in the debt limit is now front and center. The markets hate the uncertainty but we’ve been here before and very likely, just before the world ends, the politicians will agree on something. The “experts” are saying we’re going to go into default by June 1 and if that happens it will be by choice. Seems like maybe someone should be keeping an eye on the debt limit when they are voting to spend buckets of money on their favorite projects.
As noted in our last update, our lenders are still very active and looking for loans and are in fact introducing products with fewer restrictions and higher LTVs. The Prime Rate is up with the latest fed increase and now stands at 8.25%.
With both short and long term rates moving higher, the inversion in the rate curve has only moved up slightly to 168 bps. The inflation numbers continue to come down (mostly on goods), but slowly, and the number of companies announcing lay-offs seems to be increasing. Initial claims for unemployment are also inching higher.
The dollar continues to move lower since its highs last fall, although its recently gone a bit sideways with the Rupee and the Yuan.