Global economics continues to send waves of volatility throughout the US markets. How is it effecting our housing market? In the United Kingdom, one of my favorite places to visit. Their new PM Liz Truss stepped into office and immediately began sweeping tax cuts across the country. This greatly impacted their economy forcing the Bank of England to step in to buy up bonds to keep borrowing cost down and prevent a complete collapse of their bond market.
The unknown outcome of the Ukraine/Russia war and the risk of nukes continues to rise. This war has had a lasting effect on OPEC+ which is the main group of oil producing and exporting. It recently announced its largest supply cut since 2020. Forcing the US to release another 10 million to 15 million barrels of oil from our nation’s emergency stockpile.
How will these issues effect our already rising inflation issue? The PPI and CPI both came in higher than analysts expected. Pair those reports with a stronger than expected jobs report. Inflation continues to rise becoming a bigger concern for the FED.
Unfortunately this will result in more rate hikes. Right now, they are the highest they’ve been since April of 2002! As of today they are 7.12% and likely will be close to 8% within the next two months. As mentioned before, interest rates greatly effects the housing market because it effects buyer affordability. As rates go up, housing prices go down. The next several months will undoubtedly be important for the economy and the housing market.
As always, I’ll keep you up to date.
Thanks for reading,
Chris
