The Fed convenes today and there’s only a 3.1% chance of a rate cut.  However, September currently has forecast a 90% probability for a 0.25% cut and a 10% likelihood that they drop 0.5%.  Those odds will shift following today’s press conference, but I like what I’m seeing there today so far.

There are a few underlying fundamental factors that help support lower rates coming our way.  The first has to do with the Fed themselves.  They have committed to ease out of their bond portfolio in slow and stable manner for the next few quarters.  That controlled volume will keep prices elevated and yields lower.  The second is the job market.  ADP shows that 122K new jobs were created last month, which is 18% less than the 150K expected.  The BLS Jobs Report will be published on Friday and so far, the stats are expected to stay exactly as they were last month–which rarely happens.

Lastly, we have Pending Home Sales.  The number of units under contract increased 4.8% from last month, but are still down 2.6% from last year.  Not great, but a marked improvement from last month’s -1.9% MoM and -6.6% YoY.  Lower rates–or even the expectation of lower rates in the future–should crank up the volume about greater affordability, which will ramp up home sales.