How many Fed rate hikes are left?

Name: How many Fed rate hikes are left?
Uploaded: 2026-10-19T08:00:24+00:00
Duration: 21 min 39 s
Channel: HousingWire

00:11Welcome, everyone. I'm joined today by my podcast partner, lead analyst, Logan Motoshami,

00:16to talk about how many Fed rate hikes we have left in this cycle. Before we start,

00:20hear the top five trending articles on housingwire.com. First is mortgage industry reacts

00:26to Pulte's absence at MBA annual, followed by did mortgage rates just peak or is this some bond

00:32market madness? Then we have surging job site rates put 370,000 new home completions at risk

00:38and what midterms could mean for realtors in the housing market. Finally, we have could your lead

00:44gen and referral practices face FTC scrutiny? Senators want a closer look. Logan, welcome

00:50back to the podcast. It is wonderful to be here. Boy, another tough loss for the Seattle Seahawks.

00:57You know, just just just breaks my heart. Oh, yeah, right. I'm telling you, you lose the coordinator

01:05and you lose the star running back. And oh, man, much different team. Much different. Listen,

01:11who knows how many losses we will have. We're recording this on Friday morning. It doesn't

01:17come out till Monday. So, you know, don't don't. I'm just saying, you know, it's the benefits of

01:23having Thursday night football is that you can relish on some of the close losses that your your

01:30rivals have. And there we have a lot of Seahawks fans who like to talk a lot of trash. And

01:34hopefully

01:36you guys could end the year up at 500 and maybe get it. Oh, my gosh, the trash talking. Okay,

01:43well,

01:43let's talk about what's on everyone's minor industry is like how many rate hikes are we

01:48looking at now? Right? Like with the things that have changed, are there more? Are there less? Are

01:53they going to come quicker? So let's let's start from the beginning. How many think you we have?

01:59This is this is a fascinating topic, because on one hand, you can make a very, very big case that

02:08the Federal Reserve needs to get much hawkish, much more hawkish than they are right now. Because if

02:14they if they're really talking about the AI boom and, you know, trying to slow down the CapEx spending

02:22and stuff like that, then these little Italy rate hikes aren't going to do anything. On the other side,

02:30you could have people that will say, well, listen, the conflict should end soon. And we're not going

02:35to make trade war 2.0 anything. If you take those two equations out of, you know, if you take

02:41those

02:41two variables out of this equation, you know, inflation would be tame. Okay, so you have two

02:46sides of the tail. But what is the Federal Reserve saying? Because their blackout period just ended,

02:53or just started so they nobody can talk anymore. And Kevin Warsh was talking the night before night

02:59before. So he was giving everyone an idea of, of no, no definitive answer on our October rate hike. So

03:06it

03:07does not look like we're going to get a rate hike in October, but December for sure. I would say

03:15this.

03:17As of right now, you have to take Beth Hammock out of the equation, because Beth Hammock would be

03:25raising rates, you know, every, every meeting until we see growth slow down. There's enough doves or kind

03:36of mild hawks to take this gradually, slowly. But I've, I'm still in the camp that says they're waiting

03:44for this conflict to end. And they couldn't wait anymore, because it doesn't look like President Trump

03:52could get a deal. And he's kind of stuck in this kind of quagmire out there. So they had to

03:57go ahead

03:58and and and start hiking rates. It would have been very interesting if the MOU deal actually happened.

04:06And everything was back to normal. Because when we think about what happened in July.

04:14And, you know, we're getting oil, more oil out there, but the bond market really went aggressive

04:21after that. And the bond market was getting ahead of all these Fed rate hikes. But the bond market also

04:27is taking it to a level where they're looking for a lot more rate hikes than the Federal Reserve is

04:32talking about. So as of right now, I'm still in the camp that they just want to get all the

04:37insurance

04:37rate cuts back from last year. So you have two more. And then after that, who knows? Now, the problem

04:46I

04:47see is if the conflict is still going on in 2027. You've got structural issues if, you know, diesel prices

04:57are you're not going to get anything, you know, that's going to solve the diesel price issue with Russia's deal.

05:03That's just a very, very small bandaid. So the question is, you know, what happens to the farmers of America

05:10with diesel prices elevated for another six to 12 months? What happens to the U.S. economy with

05:16inflation? I mean, there is a lot the Federal Reserve can think about in terms of the worst case

05:21scenario. But for now, it looks like they're all kind of still on page for just two more.

05:28And that is somewhat workable. Like when I do these presentations now, we always talk about the slow

05:34dance between a 10 year deal and 30 year. Well, now, because we have a Fed rate hike cycle,

05:38we show the Fed funds rate and 30 year mortgage rates. And it's never a good thing for mortgage

05:44rates when you start a rate hike cycle. But the saving grace was that we never cut rates to get

05:49to a recession. We just try to get to neutral policy. Well, nobody knows what neutral policy

05:54is anymore. And Kevin Warsh doesn't want to talk, but everybody else wants to talk. So it's it's a bit

05:58of a circus right now. You know, like what what's the real game plan here? You know, if you're not

06:03doing forward guidance, because it looks like to me the Fed governors and presidents want forward

06:08guidance to stay here. It's Kevin Warsh that doesn't want. So it's a good it's a good battle.

06:15But it just seems to me they're all just get this conflict over with and don't make trade war 2

06:21.0.

06:21And this is where the midterms come in. Where it the trade war is not popular and your own conflict

06:29is

06:29not popular. So you have a policy that is affecting the Federal Reserve, but you also have a policy that

06:35is

06:35not really liked in by the American public at this point. And now you have a midterm coming up.

06:41So the Federal Reserve is like, I'm just let's just wait October because people like, why are they why

06:46are they not hiking October? Let's just wait, see what happens after the midterms. And we can take

06:52it from there. Because if you do take the trade war 2.0 away of the equation, if you take

06:59the conflict, the variables, these variables are big, the total equation changes, it's now down to

07:06AI. And that's really the big inflation, you know, chip shortages and stuff like that.

07:12Well, let's talk about that, because I feel like, you know, just in the last week, we've seen some,

07:17you know, a shift in that AI capital landscape. If you think about it, like, so AI,

07:21AI data center planning is slowing down. You've had multiple places say we're going to put a

07:27just a moratorium on it until we can figure out what's going on. Those moratorium can be

07:32a whole year. You see that you see, you know, a stock sell off of some of the AI stocks

07:37and the AI

07:38providers core weave last by the time this comes out last week, like, so we see we see a change,

07:45maybe that whole like, AI is going to come in and and save the economy or drive the economy at

07:52least is slowing down. So how do they think about that?

07:56You still have, the number I'd like to use is that the plan spending from 2025 to 2032 is $10

08:04trillion. $10 trillion that were never going to be spent is being spent to bolster the AI capacity.

08:15However, if you look at data center buildings, the spending for data center buildings is almost

08:21getting to match the multifamily construction. So it's impacting some of the economy out there,

08:33but that spending is still going to happen. So moratoriums, there's such a backlash to AI that

08:41this is midterms, right? Everyone's going to ever, hey, listen, I'm going to put a moratorium on the,

08:45and then four or five months. Oh yeah. We're, we're, we're off and going. So that's not going to,

08:50that's not going to be good enough. You need to like, you know, if you really wanted to destroy

08:56the AI trade, you have to actually destroy Sarah. That's what it is. Oh, you and I need to be

09:03Sarah

09:04Connor and Logan Connor. And you know, for mortgage rates to go down, we have to,

09:09we have to destroy Skynet. That's what it is. If Skynet goes down, mortgage rates can go lower

09:16and everyone will be happy. Oh, wow. I've got a theme now. We, well, we're going to do some AI

09:21stuff with that, oddly enough. But I just don't think these moratoriums, I think changes the bigger

09:29landscape. I mean, so six months down the line, they could just, oh, we're done with the moratorium

09:35and then things go. But, um, I do think it's a, it's a good point that you're like, there's a

09:42lot

09:42of talk ahead of midterms depends on what happens there because, you know, people are angry incumbents

09:48and, you know, uh, people challenging them know that there's a lot of anger about, you know, inflation,

09:54but also it can be very, very targeted into this, you know, AI data center thing, even though most of

10:00those people probably use AI every single day and benefit from it. Um, so I do think that's

10:06interesting to see what's going to happen after midterms when it comes to this, you know, is it just

10:11a blip? You know, with this, the two things that are driving rates are the two things that are the

10:19least popular right now, you know, AI and the conflict. So, you know, I, I, I understand the

10:27people that say they need to hike in October. What are they waiting for? This is, I said,

10:31I think they're just, you know, this is Kevin Warsh wanted to buy some time. I think the federal

10:36reserve understands, but the conflict lasted too long. You know, if it was four to six weeks,

10:43originally they could have gotten away with it. Even if it was July, they could have gotten,

10:47but it's just now you don't know. And all these talk Trump's ready to do the mother of all bombs

10:53or

10:54whatever, you know, it's just, sometimes people just need to bleep up and just let the economy

11:02kind of do, do its thing. And, but it's just, you don't know, and this is dragging on to post

11:09midterm.

11:10So, um, it, it will be a problem if this conflict goes into 2027 and it gets worse. Um, and

11:20then,

11:20you know, diesel prices elevated, farmers are being hit, truckers are being hit. Um,

11:27this is why the midterms will be really interesting to see what, what's the aftermath

11:32of, you know, this negative consumer sentiment against two things that are pushing rates up.

11:38Um, and just imagine, just imagine the hypothetical, let's say there was no conflict

11:43and the trade war actually just ended. You can't do anything about AI, but two of the three variables

11:51are something that you can control to a degree. Um, you can make a deal and then you could say,

11:56okay, let's not make the trade war any worse, but the AI story becomes more interesting to see if

12:03there's any kind of follow through, uh, uh, uh, after the midterms, because everyone's going to say,

12:08I mean, remember, I always say the credit card, what happened to the 10% credit card?

12:11Everybody said, oh, we're going to cut the rates that say, well, $5,000 checks. I mean,

12:17it's just, we said, we're going to hear a lot of crazy stuff in the month of October getting up

12:23there.

12:23And, uh, but to me, it's just, I think they're just waiting. And if you can resolve some of these

12:30things, you know, you just got two more rate hikes and then that's it. And then we can,

12:34you can work with that. But when you start having, you know, six more rate hikes and

12:41more rate hikes in 2027, then it becomes more problematic. So, uh, thankfully the spreads are

12:50still good, uh, or else we'd have a, uh, much different story. You know, sometimes when,

12:55when somebody gets to hear me speak for the first time and they've never heard anything about

12:59mortgage spreads. And, you know, of course I show the chart and, you know, nobody knows what it means,

13:03but when you tell them the numbers of where mortgage rates would be, if this was 22, they're

13:08like, Whoa, Toledo, what's that? Oh boy, that's not good. I said, yeah. So you hug a mortgage spreads,

13:15you take a selfie with it, you buy it, you drink bourbon, man, so much bourbon here in Louisville,

13:20Kentucky, but, um, you know, you're in the land of bourbon there. I know, I know. And we have that

13:27bourbon joke with the FICO score chart that we've done over the years, but it's still, it's still,

13:34we could still get this to work. We just need some resolution on a few things. And hopefully

13:39the fed just does two to just do two more rate hikes. And then we'll just, we'll just take it

13:44from there. But again, the things that are causing this are still in play, even with the bond yields.

13:50I mean, we're all like, Oh my God, the 10 year yields at five 12. Yay. You know, who would

13:56have

13:56thought, you know, that would have been something said that we would be like, yay. It's not 5.35%,

14:04you know, but, um, yeah, it's, it's, it's, it's, it's, unfortunately, we just haven't had a normal

14:10year post COVID just with calm stuff. I mean, think about January and February of 2026.

14:20It was so nice. We didn't know how good we had it. You had all this fake AI is going

14:26to lose all the

14:27great massive unemployment, the, you know, all this stuff. And it was just like,

14:31everything was common. We would have a couple of hundred, a couple of hundred thousand. My,

14:35my forecast actually would have been wrong with the 237,000 more home sales with rates. That's

14:40six and a quarter on it. We would have had probably about 341,000 based on what, what the sales

14:45trends

14:45were going, but yeah. So you just like, like in the movie gangs in New York, we never look away.

14:52Blood stays on the blade and we, we take it one day at a time and we try to make

14:55sense of it. But,

14:56uh, for now just two more rate hikes, but again, we got some issues and some, some stuff we have

15:03to

15:03take care of over the next few weeks. So, um, do you still feel like Beth hammock is the, you

15:10know,

15:10the hawks still running the fed from your perspective? You know, if let, let me tell

15:14you how powerful Beth hammock would be. If Beth hammock came out and said, I don't want to hike

15:22rates anymore. Cause I feel like the economy, you know, the bond market will go lower. That's what,

15:30that's what, that's how much power she wields now. Um, because she has been her and Lori Logan,

15:38um, are running the show in that sense because they were early, they pushed it up and they kept

15:44pushing it up and they're keep on going where even a Lori Logan in 2024 said, we don't, we,

15:50if the 10 year yield keeps on going higher, that is restrictive for us. And you know, we don't have

15:56to do many. They don't even care. Like Beth hammock was like, I don't care what the 10 year yield

16:02is.

16:02We need rate hikes. You know, Lori Logan is insane. The 10 year yield at 5.35% is

16:07a problem. So, um, yeah, I, uh, until Beth hammock, if she actually changed since she's the leader of

16:16the Hawks, you know, that, that would make a difference where Kevin Warsh is going to, you know,

16:22probably eventually get rid of probably the fed meetings, you know, the Q and a is or shorten them

16:26even more. So we'll, we'll, it'll, it'll be interesting, but you know, trying to explain why

16:31they might not hike in October is, is more or less, everybody wants to get some resolution on these

16:35things. Uh, and the trade wars us again, that's us. We're the ones who started it. We're the ones

16:42who raised tariffs like, Oh, 50%, 200%, one or whatever it is not normal. Then, you know, and,

16:50uh, but you're starting to see truckers and farmers and people start to, you know, and then rates are

16:58higher, right? The whole, this only works if the Trinity and the Trinity is the game plan. We thought

17:03the white house needed lower energy prices, lower rates, lower dollar, and it all backfired in 2026.

17:09And now you see the problem. And that's why we created that Trinity backdrop. This can really

17:14only work if these three things are heading lower. They can't operate well if there are three things

17:19going higher. And what you mean by this is the, is the trade war is the terror strategy.

17:25Well, I mean, you, you, you can't do, it's difficult to do a trade war. If energy prices

17:31are up, mortgage rates are up and the dollar's higher. Cause you're not with the dollar higher,

17:36you're not going to get, you're not going to be able to export stuff with energy prices elevated.

17:41Everybody gets mad because nobody likes gas prices up and with mortgage rates up, you know,

17:45because they'll see the inflation embedded on the, on, on the trade war. And then they think,

17:50you know, this is a negative, but if all were lower, I mean, this is why Trump wanted lower rates.

17:55Because it, it can, it can, you know, masquerade the, the, the trade war to agree, but the conflict,

18:04you know, I mean, out of all the things to, to kind of throw a grenade into the whole crazy

18:11Halloween party, this happened this year and that was just chaos. Right. And it is interesting.

18:17It would have been a very, very fascinating year if there was no Iran news whatsoever.

18:23And the federal reserve said, we understand the tariff inflation. It's going to wind itself out.

18:28And we wouldn't have had this volatility with the bond market after the MOU deal broke off.

18:34So it would have been a completely different backdrop. But to me, I just say that the labor

18:37data got better and bond yields would have gone up. Mortgage rates would have gone up three years.

18:42Just, just would have had this chaotic atmosphere from July to where we are right now. And,

18:50but it's here and we will take it one day at a time.

18:53All right. We've done all those big issues. Let's talk about the economic issues that you track in

18:58the tracker. What do you, what are you looking for for the rest of the year?

19:02You know, again, the, the, the tracker to me has been very consistent mortgage rates up here,

19:08especially on a year of your basis, when you're working from

19:11almost one and a quarter percent lower rates, the year over year data is just going to keep on

19:16declining on the sales side. We're basically kind of toward the seasonal peak of inventory. So if

19:23I still think we should have, maybe, maybe we should see if it adds up a little bit more extension

19:30out here, but you're, you need to start gearing up for 2027. And we've had this happen before where

19:39rates stay elevated to start the year and they get better at the end of the year. So,

19:45so you have to framework that. And in 2023, the rates peaked around 8%. We still haven't hit 8%

19:54on mortgage rates, even though the 10 year year. Thank goodness.

19:56Hug a mortgage spread. And then all of a sudden, you know, mortgage rates came from 8% all the

20:02way

20:02down to 6.64. And, you know, that was the bottom of that. And then rates went up right after

20:07that.

20:08So it's, it's something that, you know, you want to prep and see where everything is going

20:13for 2027. And that's what the tracker is going to be very useful. Because I just don't, I've never

20:18seen demand and grow with rates here. So during the last three years and 10 months. So I'm not

20:24expecting anything there. Purchase application data is down again, week to week, double digits year over

20:29year over year. These comps are very hard to show any kind of positive trends. So we get it,

20:36we run with it, and we'll see if anything changes out there. I'm just, the only thing I'm really

20:41concerned about is we have to make sure that new listings data doesn't have any kind of big negative

20:46moves on a year over year basis, because then those are sellers that just say, I'm just going to wait.

20:51And that's, that's a hit to demand supply is a function of demand, because most sellers are buyers.

20:57It's a great way to explain it. Logan, once again, thank you so much. We will talk again soon. And

21:03as

21:03always, we're recording this on Friday. No telling what happens between now and Monday when this airs.

21:09It's always a crap shoot.

21:11And I will, you and I will both be in Dallas on Monday, and I will be talking to the

21:15builders

21:16of America. So I cannot wait to talk with the people that I say are not the March of Dimes.

21:22They are, we are having our home builder summit. Very excited about that.

21:26Yep. We look forward to seeing you soon. Thanks.

How many Fed rate hikes are left?

Category

Transcript

Recommended