Renowned chief economist for a leading bond fund, Lacey Hunt, recently predicted a decrease in both inflation and mortgage rates in an enlightening Zoom discussion. This projection aligns with the current economic landscape and the insights of other experts in the field, including Mike Wilson of Morgan Stanley and Danielle Dimartino, who are notable mentees of Hunt.
In addition to Hunt’s insights, respected economist David Rosenberg provided his economic perspective. Among his predictions, Rosenberg expects a reverse in used car prices, which had been a significant issue last month. This development could positively impact the Consumer Price Index (CPI) in the coming month.
Another anticipated economic shift is the drop in the cost of living adjustment factored into Social Security payments, suggesting a likely decrease in inflation. Simultaneously, a decline in hotel and restaurant prices is being observed, which historically signals a potential tipping point in the economy and a shift towards lower rates.
These forecasts are echoed by realtor.com and economist David Stevens, who predict mortgage rates in the mid to low fives, pointing towards an overall consensus on improved rates soon.
The emphasis will be on the charts in the coming week due to an expected lull in market-moving data. The 10-year treasury bond will be of particular interest. If the falling trend line intersects the rising trend line, this could result in a pennant formation, which typically signals a potential breakout. Traditional technical analysis suggests that the trend is likely to continue in the direction of the previous one, indicating an improvement.
While the future cannot be predicted with absolute certainty, these insights provide a strong case for economic optimism. As Hunt put it, the current situation could be seen as a “winning hand,” requiring patience and careful market observation.
