Interest Rate Expectations Show Possible May Hike

Recent interest rate expectations show a 53% chance of a 25 basis point rate hike in May, signaling a shift in the market's outlook. This is a significant change from just last Friday when the probability of a hike was at 0%. Despite the possibility of rising rates, the housing market remains remarkably resilient, with prices only down 5% from their peak.

This is particularly impressive considering that housing prices had risen over 40% in just three years, a historic gain. Despite this surge, the market appears to be weathering the storm of rising rates.

However, the futures market is still seeing at least three rate cuts by December 2023, indicating a belief that the current spike in rates is only temporary. This stands in contrast to the Fed's recent statements that they do not expect rate cuts in 2023.

There is concern among some analysts that Federal Reserve Chairman Jerome Powell's efforts to bring inflation down could have a negative impact on the jobs market. Despite these concerns, Powell has remained steadfast in his commitment to stabilizing inflation and ensuring long-term economic growth.

Overall, the current state of the housing market and interest rate expectations demonstrate a complex and dynamic economic landscape. While there are reasons for both optimism and concern, the future remains uncertain. Investors and consumers alike will need to stay vigilant and adaptable as new information emerges.