Good Monday AM,

Not much data today, but on the heels of a weaker dollar (due to the ECB rate hike last week and likely BOE hike this week) along with expectations tomorrow’s CPI number, will show inflation has peaked, most asset classes are up. Stocks are pushing higher, crypto is at the best place in a month, and bonds are doing ok. Mortgage Bonds are outperforming Treasuries right now, which does not normally bode well for Mortgage Bonds as they are highly correlated and Mortgage Bonds most often follow their much bigger brother.  Still some debate over what comes next from the Fed. Markets starting to get the picture that the Fed will have to ease.. Here is a pretty picture to show current market expectations. A quick rise and then a quick fall.

Speaking of conventional loan limits…

It is becoming that time of year again. If we use the latest figures from the FHFA, another double-digit jump in the loan limit appears to be in the offing. Based on second-quarter numbers, the ceiling would rise 12%, to nearly $725,000. In high-cost markets, it would fly past the million-dollar benchmark to roughly $1,087,500. The new loan amounts though depend on the third quarter number, which will be announced on November 29th. If there was just a 3% year-over-year increase in the index in the third quarter, the baseline limit would still increase by 15%, to $745,000. If the bump in the index was 6%, the ceiling would rise by 18%, to $764,000. We don’t have enough information yet to know for sure, but we have already made an adjustment to accept conventional loans up to a loan amount of 715k.

And last, a little bit more about the economy and cost of money…

The U.S. dollar has been surging over the past year, as investors look for a haven at a time of volatile stock and bond prices. The strong dollar has made imports cheaper for U.S. consumers but it also poses risks to the global economy. First, a strong dollar makes emerging market currencies less valuable, pushing up inflation in those countries. Higher inflation forces central banks to raise interest rates faster than they otherwise would, risking recessions around the world. The strong dollar also cuts into profits of U.S. corporations that have significant business abroad. And it could lead governments to intervene directly in currency markets or encourage investors to hoard dollars, which could disrupt financial markets. If you take a close look below, you can see the beginning of a downturn in the performance to coincide with the ECB move this past week. I would expect the dollar to sell off a bit which would help interest rates.

Please remain safe and healthy, make today great!