Fannie Mae Sees Mortgage Rates Falling Soon

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📈 Yesterday's Market Recap

Markets closed last week on a high note, with Friday’s gains reflecting optimism over potential trade resolutions. The S&P 500 climbed 0.79% to 6,791.69, Nasdaq 100 rose 1.04% to 25,358.16, and Dow Jones advanced 1.01% to 47,207.12, fueled by better-than-expected inflation data and hopes for Fed rate cuts.

• Asian Markets Rally: Japan’s Nikkei 225 soared past 50,000 for the first time, up 2.1%, on trade deal optimism with the U.S. → ABC News


• Inflation Data Boosts Sentiment: U.S. inflation slowed to 0.2% month-over-month, spurring expectations of further Fed rate cuts. → StockTwits


• Tech Sector Drives Gains: Tech-heavy Nasdaq led with a 1.1% jump, as investors bet on AI and earnings from big tech names. → CNBC

📈 Daily Performance Snapshot

🔭 What to Watch Today

Today’s calendar is packed with events that could ripple through markets, from policy moves to earnings reports. Keep your radar on for shifts in trade talks and economic data that might nudge the Fed’s next steps.

💡 Opportunity Watch

Amidst shutdown chaos and trade negotiations, a few sectors and stocks stand out as potential plays for the sharp-eyed investor. Here’s where I see value lurking.

• First Solar (FSLR): Up over 3% premarket on a bullish Roth Capital outlook, with a potential tariff catalyst by mid-November boosting solar demand. → StockTwits
• Argentine ETFs (ARGT): Surged 18% premarket after Milei’s midterm win, bolstered by U.S. financial support, offering a play on emerging market reforms. → Seeking Alpha
• Palantir Technologies (PLTR): Gained 1.5% premarket on a potential defense contract with Poland, riding NATO spending waves and nearing a $200 stock threshold. → StockTwits

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🔥 The Big Bullet

Fannie Mae Predicts Major Shift in Mortgage Rates

What happened: Fannie Mae, the government-backed mortgage giant, has predicted that a significant drop in mortgage rates could be on the way. This comes after several years of rising rates that made it more expensive for Americans to buy homes. Recent signs of slowing inflation and economic uncertainty are fueling the shift in thinking. Fannie Mae believes that rates, which have been sitting at multi-decade highs, could soon begin to decline. The forecast is based on expectations that the Federal Reserve might cut interest rates next year. That would make borrowing cheaper across the board. A cooler housing market and weakening consumer demand are also playing a role. If rates do fall, it would mark a turning point in one of the longest rate hike cycles in recent history.

Why it matters: High mortgage rates have sidelined many potential homebuyers, especially first-time buyers. A shift downward could open the door for more families to enter the market. Lower rates can also help current homeowners refinance and save money. Some markets like Manhattan have already seen steep losses, with one in three condo owners selling at a loss. Falling mortgage rates might ease that pressure. But there’s a risk too: if rates fall quickly, demand could outpace supply, pushing home prices back up. Investors in real estate, construction, and home improvement sectors are watching closely. The forecast also adds pressure on the Fed, which is balancing inflation control with market stability.

What’s next: All eyes are now on the Federal Reserve’s next move. If inflation keeps slowing, the Fed could cut interest rates as early as the first half of 2026. This would likely support Fannie Mae’s prediction and drive borrowing costs lower. Investors are already bracing for a midweek double whammy of data and Fed signals. Watch for new home sales, inflation reports, and consumer confidence numbers—they will all impact rate outlooks. For potential buyers, locking in a mortgage too early or too late could mean big differences in cost. Builders and lenders may adjust strategies if they sense rates dropping soon. And policymakers will need to weigh how fast and how far to ease monetary conditions.

• Some economists believe that even if the Fannie Mae forecast comes true, mortgage rates may still hover above 6 % for the near future. – NY Post
• Why a cut by the Federal Reserve may not automatically translate into much lower mortgage rates, because of other forces such as bond markets and home‑price pressures. – Morgan Stanley
• The original source of Fannie Mae’s revised forecasts, offering greater insight into how and why their expectations changed. – Fannie Mae

🧭 Policy & Market Ripples

• U.S.-China Trade Deal Nears: Trump signals a trade agreement with China could finalize this week, easing tariff fears and lifting Asian markets. A TikTok resolution is also in play. → Reuters
• Brazil Trade Talks Progress: Lula and Trump express optimism for a U.S.-Brazil deal, potentially reducing tariffs after a productive ASEAN Summit meeting. → ABC News
• Argentina’s Market Surge: Milei’s midterm win boosts Argentine equities, with U.S. support stabilizing the peso and driving ETF gains like ARGT up 18%. → StockTwits

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