Analyst who correctly predicted 8% mortgage rates has a new target
Many believed last year that interest rates would need to head much higher to wrestle runaway inflation lower, but even the most pessimistic probably didn't see the sky-high lending rates consumers are paying this year coming.
One person who correctly predicted we would see mortgage rates soar is Real Money Pro analyst
His forecast in
Given Kamich's accurate rate forecast last year, borrowers and investors may want to pay attention to what he thinks may happen to rates next.
Home buyers have been hit hard by rising mortgage rates in 2023.Shutterstock/TS
The
It was doing well on both fronts until late 2021, when Covid-era easy money policies and a supply chain fiasco that crimped the availability of many items caused prices to skyrocket in 2022.
Related: 2 strategies for a lower mortgage rate that you probably haven't thought of
Inflation got so bad that the central bank was forced to reverse years of easy-money policies that had kept interest and mortgage rates at multidecade lows. Since
Higher rates have slowed economic activity, helping to wrestle inflation lower, but loan rates have surged.
Gross Domestic Product, or GDP, barely grew in the first half of 2023. As a result, the CPI Index, a common inflation measure, slowed to 3.2% year-over-year in October, down from a peak above 9% in
However, the 10-year
As a result, the 10-year
Charts suggest 10-year yields could do this next
It was his analysis of the 10-year Treasury Note yield chart that led to his conclusion that rates had broken a forty-year downtrend last year, leading him to correctly forecast a 5% 10-year
Now that those rates met his target, Kamich recently revisited his analysis for additional insight. The good news is that, at least for now, he thinks rates could make their way lower.
"In October we got a 'heads up' that a pullback was possible as the 12-day price momentum study made a lower high which yields made a higher high," wrote Kamich. "The Moving Average Convergence Divergence (MACD) oscillator [a momentum indicator] crossed to the downside in early November and has since fallen below the zero line."
The downside momentum may continue. Kamich used daily and weekly point-and-figure charts to calculate a 10-year yield target of 4.16% and 3.15%, respectively.
Since a lower 10-year
Point and figure charts can be used to calculate targets, but they don't provide a timeline. There's no telling if or when we might see a sub-4% 10-year yield, but
Analysts at
They think that by the end of 2024, the Federal Funds Rate will be lowered by 2.75% to finish the year at 2.5%.
They're not alone.
If so, a friendly Fed could be the catalyst that gets the 10-year
Sign up for Real Money Pro to get more insight from Kamich, including the stocks he thinks could be winners.
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