Tuesday, June 23, 2009

Fed Starts Meeting Today

The Federal Reserve Board begins its first of a two day meeting today. They will make their announcements as to what they see the market doing and how they are going to continue to "help" the American Economy. The consensus is that the fed funds rate will be un-moved, but that the Fed will begin to buy more long term Treasuries. If that happens, it has the potential to move Mortgage rates down.
There are still other factors at work here, that we must remember. The Treasury auctions that start today at 1pm EST flood the market with investments that may look more attractive than bonds. This competition in the market can drive mortgage rates higher. Also remember if rates drop, more refinances will hit the market and then there is added supply there also. This added supply usually accounts for worse mortgage backed security trading and higher interest rates.
This will truly be a wait and see environment.

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