10/30/2025
Fed Cuts Rates - And Rates Shoot Higher (Again)
I got more “I hate Jerome Powell!” emails yesterday than I’ve ever received before.
OK…I have never received that many, but yesterday still shocked me.
AND WHY IS EVERYONE HATING ON JEROME???
The Fed cut the Fed Funds Rate by 0.25%, exactly as expected, and long-term rates shot higher shortly thereafter – and they are again higher today.
Rates shot up largely in response to Mr. Powell’s “hawkish” comments during his follow-up press conference.
He made it very clear that an additional rate cut in December is far from certain (despite betting markets implying otherwise).
BUT – DO JEROME’S COMMENTS MAKE ANY DIFFERENCE?
In the very short run, Jerome’s comments do make a difference (see today’s rates).
But over the next week or two, they are almost irrelevant – for the reasons I have explained many times in this blog.
KEY POINTS ABOUT LONG-TERM/MORTGAGE RATES REITERATED
The Fed does not control long-term rates; the bond market does.
Remember how mortgage rates fell a full 1% from 2023 – 2024, even though the Fed didn’t cut?
Remember how mortgage rates increased a full 1% in the fall of 2024, even though the Fed cut the Fed Funds Rate by 1%?
The bond market responds primarily to growth and inflation expectations.
The “supply” of Treasuries coming to market does not impact rates as much as many pundits believe, meaning we can borrow a sh*t-ton (official term) more without impacting rates significantly.
EVENTS THAT COULD BRING RATES BACK DOWN
Events that could bring rates back down include weak employment reports (including private sector reports like ADP’s, or BLS reports once the government opens), cool inflation reports (more likely now because the money supply is growing more slowly, oil prices are way down, and rents are down), major layoff announcements, corporate earnings reports, and a stock market correction.
Events that could push rates higher include trade deal announcements or the lifting of tariffs by Mr. Trump, hot inflation reports, and strong employment reports.
I remain on team-rates-falling. But remember, we’re in a different world right now (with more debt, tariffs, and government meddling than ever), so nobody knows for sure.
MR. TRUMP’S IRONIC WISHES
Mr. Trump wants a booming economy and low rates. But the bond market has been telling us forever that you can’t have both. Somebody might tell Mr. Trump…
FASCINATING DATA POINT: DID THE RATE CUT AVERT A STOCK MARKET CRASH?
ZeroHedge took time off from telling us we’re all going to die from inflation to share this SUPER INTERESTING POST: "Today will be the fifth time that the Fed cuts rates with the S&P 500 at all-time highs. All prior instances the S&P 500 was higher a year later with an average return of 20%. The worst one-year return was a 15% gain which occurred last year."
- Jay Voorhees NMLS 310167
Founder/Broker | JVM Lending
