The Fed has lost control of the bond market. (Mortgage rates spike)

About this video

• Video Title: The Fed has lost control of the bond market. (Mortgage rates spike)
• Channel: Reventure Consulting
• Speakers: None explicitly named in the transcript.
• Duration: 52:50

Overview

This video discusses the Federal Reserve's recent interest rate cut and the unexpected spike in mortgage rates that followed. The speaker argues that the Fed has lost control of the long-term bond market, which is now more influenced by government debt levels than by Fed policy. The video also examines the struggling housing market, using homebuilder Lennar's declining average selling prices and revenue misses as an example, and analyzes current housing market trends across various US regions.

Key takeaways

• The Federal Reserve cut interest rates, but mortgage rates subsequently increased, indicating the Fed's diminished control over long-term yields.
• Government debt levels are exerting upward pressure on long-term interest rates, overriding the Fed's short-term rate cuts.
• Homebuilder Lennar has significantly cut average selling prices (22% from peak) to their lowest in seven years, signaling a struggling housing market despite rate cuts.
• Home prices are declining in approximately half of the US states, with notable drops in Florida and California, while some areas in the Midwest and Northeast are still seeing increases.
• A significant portion of viewers polled indicated a preference for a recession with lower mortgage rates and falling home prices over the status quo with higher rates and stable prices.