The Federal Reserve may lower its benchmark interest rate by 50 basis points in 2020 if sustained financial market stress affects economic activity against a backdrop of the coronavirus epidemic.
Bond yields will likely stay range bound in early 2020 as the economy shifts to a lower gear and central banks shift to neutral.
The Fed remains divided on the trajectory of interest rates; a pick up in U.S. housing activity may increase this division.
The Federal Reserve delivered on its widely expected quarter-percentage point interest-rate cut at the July meeting. It was the first reduction since 2008 and came in response to slowing global economic growth and muted inflation.
In today’s post-housing bubble environment, the long-awaited recovery has failed to build a solid foundation. The high unemployment rate, declines in household income, and significantly tighter credit conditions have left both existing and new home sales close to recessionary levels in the United States.