For the week of June 8th – June 15th, 30-year and 15-year interest rates remained flat. As was widely expected, the Federal Reserve decided to keep rates steady on Wednesday.Mortgage rates were also generally steady, but the two have little to do with one another.
Because the Fed was almost certain to "pause" its rate hike campaign Wednesday, the pause didn't have a material impact on the bond market. The Fed Funds Rate is an ultra-short-term rate that applies to interbank borrowing on an overnight basis. Mortgage rates, on the other hand, are influenced by bonds that have longer durations ranging from several years to up to 30 years.
Consequently, longer term rates and shorter-term rates often behave differently. Wednesday is a decent enough example with 2-year Treasury yields rising 0.015% and 10-year Treasury yields falling 0.037%. This wasn't destined to be the case right at the time of the Fed announcement, however, because the Fed's dot plot (a chart released 4 times a year that shows the Fed's best guess at the path of the Fed Funds Rate in the coming years) suggested the median view is that two more rate hikes will be needed this year.
In other words, if the economy and inflation play ball, the Fed won't necessarily need to hike rates again during this cycle. That's the kind of thing that tends to lie at the beginning of a longer-term trend toward lower rates. It's also the kind of thing that would still take a few months to confirm, assuming the data suggests lower inflation.
Mortgage rates briefly reached an average of 7% Wednesday before retracting to the high 6's by the end of the day. While mid-day rate changes are not a daily occurrence, they are more likely to happen when the bond market experiences significant fluctuations during business hours.
