HousingWire Annual: Logan Mohtashami covers what’s happening with bonds, mortgage rates

With inflation growth trending down and long-term mortgage rates surging, the economy should cool without additional rate hikes: Mohtashami

CEDAR CREEK, Texas — At HousingWire Annual on Tuesday, HousingWire Lead Analyst Logan Mohtashami demystified “the madness” unfolding in the bonds market in front of an audience of more than 300 real estate and mortgage professionals.

In his keynote session to kick off the event, Mohtashami highlighted how the Fed feels increasingly uncomfortable with the speed at which the bond market is rising. He noted the benchmark 10-year Treasury yield edged 4.8% for the first time since 2007.

On Monday, the Mortgage Bankers Association (MBA), National Association of Realtors (NAR) and National Association of Home Builders (NAHB) called on the Federal Reserve to clarify the Fed’s rate path along with its plans for its mortgage-backed securities (MBS) portfolio.

As a result, many central banks’ leaders tried to talk down the market in an effort to calm the industry, Mohtashami said on stage. He pointed to President and CEO Lorie Logan of the Federal Reserve Bank of Dallas as an example.

The high 10-year Treasury yield, which is mirrored in higher mortgage rates, has a very restrictive effect on the economy — and the housing sector, specifically, Mohtashami told the audience.

In fact, higher long-term rates naturally have a cooling effect on the economy, dispensing the Fed from another rate hike at the next FOMC meeting on Nov. 1. 

As bond yields rise and the inflation growth rate slows, the Fed should start cutting rates in 2024, Mohtashami added. 

“The growth rate of inflation is falling, and it is falling by itself without a job-loss recession,” Mohtashami said. This gives additional reasons for the Fed to stop hiking rates.

The expected release of the consumer price index on Thursday will give additional insights on the state of the economy, and inform the market on the Fed’s potential trajectory.

Mohtashami was the first of several speakers at HousingWire who covered everything from the state of the housing market and current marketing strategies to AI and business insights. The third-annual HousingWire event runs Oct. 10-12 at the Hyatt Lost Pines.

Check in the coming days for more live coverage from HousingWire Annual.

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