“The Federal Reserve cut interest rates by a quarter point on Wednesday, bringing the target range to 4.25% to 4.5%. The central bank revised its outlook for rate cuts in 2025, however, indicating that there will be two reductions. That’s down from the four forecast in September. Fed Chair Jerome Powell said that the central bank would be looking for progress on inflation, noting, ‘We have been moving sideways on 12-month inflation.'” CNBC, 12/18/24

The suggestion of only 2 cuts in 2025 was not what investors and bond markets wanted to hear. Stock markets plunged yesterday, though they started to rebound slightly today, and mortgage interest rates spiked up. These changes constitute very short-term data.

Interest rates:  Counter-intuitively, rates have climbed since the Fed first started reducing their benchmark rate – because the reductions and guidance on future cuts were never as substantial as investors desired.

Stock markets: The sudden drop from the latest historic highs followed the latest Fed pronouncement (but have rebounded slightly so far this morning). But as illustrated, short-term ups and downs are very common.

Snapshots regarding debt: Mortgage, credit card, margin, federal. Except pertaining to mortgage debt (which, though ticking up, remains historically very low), indicators pertaining to margin (investor), credit card and, especially, Federal debt are not moving in positive directions. The huge, continuing increase in federal debt and debt payments may eventually have serious ramifications for bond markets – and mortgage rates.