The Federal Reserve provided the clearest hint yet that it could start raising interest rates as soon as March in their press conference yesterday.  Fed Chairman Jerome Powell said asset purchases also are likely to halt in March, and the central bank released a paper outlining principles to start “significantly reducing” the bond holdings on their balance sheet.

Rising interest rates are causing big headaches for mortgage lenders, especially those who depend most on refinance business. Demand is simply drying up. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 3.72% from 3.64%.  As a result, mortgage refinance applications, which are highly sensitive to daily rate moves, fell 13% for the week and were 53% lower year over year, according to the Mortgage Bankers Association. Rates have now been moving higher for five straight weeks.

The U.S. economy grew at a much better than expected pace to end 2021 from sizeable boosts in inventories and consumer spending despite signs that though the acceleration likely tailed off towards the end of the year.  Gross domestic product, the sum of all goods and services produced during the October-through-December period, increased at a 6.9% annualized pace. The increase was well above the unrevised 2.3% growth in the third quarter.