Yields edge lower on dovish Fedspeak. Treasury yields largely declined across the curve today as New York Fed President Williams shared a less aggressive outlook than markets anticipated, projecting one more rate hike in 2026 and none in 2027. The 2-year yield closed nearly flat at 4.79%, while the 10-year yield closed 3 bps lower at 5.21%. Meanwhile, equities inched lower, with Williams’ comments helping to trim deeper losses, with the S&P 500 and NASDAQ closing 0.02% and 0.15% lower, respectively.
Fed Williams does not see any rate hikes in 2027. New York Fed President John Williams shared today that he currently believes it may be appropriate to have one more rate hike in 2026, but doesn’t see “any reason to believe that we would need to do more.” He pointed to the easing pressures from tariffs and energy prices, explaining that “these measures of underlying inflation have come down.” He noted that AI remains a threat but believes that productivity gains will become a disinflationary force overtime as well. He stated that, “This is not an economy that is heating overall.” Futures markets now see a December rate hike as ~86% likely, and another rate hike fully priced in by March 2027.
Existing home sales rise for the first time in four months. September sales of existing homes in the US ticked up 1.5% last month, to 3.99 million, beating forecasts of 3.95 million and the prior month’s 3.93 million. The uptick came despite mortgage rates climbing more than 0.5% since early September, to ~7.49%. The past two months have marked the slowest of the year for existing home sales. Meanwhile, the median existing home price rose 1.3% YoY, while the supply of existing homes for sale increased 4.6% YoY. Danielle Hale, chief economist at Realtor.com, said, “The reset in rates over the last five weeks has shaved a little more than 6% off of the purchasing power of buyers across every budget,” adding that this “is almost twice the typical price-savings advantage of buying in this less competitive season.”