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March 30, 2024 Market Update

U.S. stocks continued to edge higher in the holiday-shortened week through Thursday’s close (March 28th).  The S&P 500 Index rose 0.4%, lifting the benchmark to yet another record high and marking the best quarterly gain (10.2%) since 2019.

The bond market, on the other hand, continued to churn in a tight range, based on Vanguard Total U.S. Bond Market ETF (BND), a proxy for investment-grade corporate and government securities.  Although BND rose for a second week, it’s been more or less treading water in 2024, slipping 0.7% year to date.

The bond market continues to struggle with uncertainty about when the Federal Reserve will start cutting interest rates.  There’s still a modestly confident forecast that June will mark the beginning of a dovish policy shift, but the implied probability of cutting (via Fed funds futures) has faded lately and is now roughly 60%-plus.

After climbing to a 23-year high of 7.79% in October, the average interest rate on a 30-year mortgage has slipped to 6.79 last week.  Declining interest rates combined with a growing supply of homes on the market appear to be breathing new life in the long suffering home market. 

Thirty-year fixed mortgage rates averaged 6.87% for the week that ended March 21st, as compared to a peak of 7.79% rate this past October.  A preliminary report by the National Association of Realtors Home estimates sales rose in February from the month prior, marking the first time in more than two years that sales increased for two consecutive months.  Sales of existing homes surged 9.5% in February to a seasonally adjusted annual rate of 4.38 million. 

However, for real estate agents a recent legal settlement involving the National Association of Realtors (NAR) overshadowed the positive market news.  Previously, sellers who used a NAR agent could set the buyer's agent commission.  The settlement now grants buyers the right to negotiate their agent's fees, potentially leading to increased competition among agents and potentially lower overall compensation.  

This shift in compensation structure is likely to force some agents to consider new careers.  However, with the abundance of information readily available on real estate websites like Zillow, Redfin, and Trulia, a modification of the traditional commission model was likely inevitable.

That’s all for now.  Have a great Easter weekend and invest wisely my friends.