Rate Update March 18, 2009
Fixed Mortgage Rates are even with yesterday.
The Fed’s policy statement is due to be released today at 2:15pm ET. It is likely that they will keep the Fed Funds Rate where it is at 0-.25%; this isn’t big news. What we will be looking for however, is how they comment on the stimulus package and other methods of helping our economy. The market is likely to react off of these comments but it will be interesting to see if it is enough to break Mortgage Backed Bonds out of their current trading pattern.
In the past, we have been very concerned with the Consumer Price Index numbers (CPI), and even more so with the Core CPI (where volatile food and energy are taken out); but as the recent economic downturn has taken place Inflation has become less of a concern. That was apparent today as the Core CPI was reported slightly higher than expectations. This may have caused Mortgage Backed Bonds to trade much lower in the past (Remember that Inflation is a large nemesis of long term debt like mortgages), but today’s numbers didn’t have any effect of bonds as they are currently trading even on the day.
Current Outlook: Cautiously floating as bonds trade above the 25 day moving average