Mortgage Blog

The U.S. Federal Reserve Board (FMOC) decided today to lower its target for the federal funds rate 25 basis points to 4-1/2 percent.

Federal Reserve Chairman Ben Bernanke signaled he isn't eager to cut again soon. He believes the threats of inflation and a weaker economy are roughly in balance. It is possible that Fed will remain on hold for the near term and was a clear move to prevent some of the adverse effects of tightening credit conditions. However, the Fed did not outline a detailed plan for the future.

Too read the FMOC press release clich HERE

With no economic reports scheduled for release today, Stocks will likely continue their role in leading Bond prices.

And hot news from Apple could cause Stocks to take a run higher on renewed investor confidence. Apple, Inc. announced blow-out fiscal fourth quarter earnings after yesterday’s close, reporting a huge 67% increase in quarterly profits on strong sales of their new iPhones and iPods, in addition to their Mac computers. So Stocks will likely come out of the gates strong, which could pressure Bond prices lower – but whether Stocks are able to hold their gains remains to be seen.

Technically, Bonds are trading just between a floor of support at $100.59 and a ceiling of resistance at $100.81. We’ve enjoyed a nice move higher following last Wednesday’s Alert to Float, and we’ll now want to watch very cautiously to see if Bonds are able to hold their ground above support.

“Yesterday's Fed Meeting Minutes pressured Bonds lower. Why? The main reason is that the less vigilant tone towards inflation has Bond traders thinking that nobody is in the Bond's corner, if inflation is allowed to emerge.

FOMC minutes

Technically, Bonds have failed to hold on to support at the 200-day Moving Average, but we have dipped below this level a few times over the past couple of weeks. There are several layers of support below. So, at this time, I will recommend floating. If anything changes, I'll let you know.”