Florida Mortgage Rates – Evening Report

by Florida's #1 Mortgage Planner on June 25, 2008

Locking Stance:  LOCKING     Mortgage Bonds:  -3bp

What a wild ride immediately after the Federal Reserve released their decision to leave the Fed Funds Rate unchanged and issued their policy statement.  Bonds dropped to -47bp on the day before rebounding to end only down 3bp.

Why the rebound?  Good question, but most likely it was due to short covering.  Why?  Why would any trader want to buy bonds when the Fed issues the following statement…

Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.

They issued a "balanced" statement to justify their decision to not raise rates, even though they feel inflationary pressures are getting out of control.  That means that inflation is likely going to climb and that is even what the Fed sees, which is bad for bonds and mortgage rates.

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