It’s Fed Day! So What?
Today is Fed Day! Every 6 weeks, The Fed gets together to work on policy stuff. They have a direct impact on the Fed funds rate. All other rates are affected by this, including 10-year treasury and mortgage-backed securities (which actually set mortgage rates).
Updates from Today’s Fed Meeting
Today’s announcement was that they are going to hold steady on interest rates for now, and they are not making any real predictions about the next meeting in March. The mortgage market likes it. Bonds are up, which is good because it brings rates down.
The Fed is definitely making it sound like they are about ready to make a move. They are still holding pretty steady. I watched one analysis that talked about a point in the official statement: they removed anything talking about the stability of the banking system.
There is a bank in New York that is teetering on the edge. Their stock is tanking and their cash situation isn’t good. This could be another reason why they need to bring rates down.
The whole process is very complicated! I’m geeky about it – I love looking at it, even though a lot of it is beyond my understanding.
Long story short, to summarize the results of The Fed meeting today: they held the Fed Funds rate, and the mortgage-backed securities liked it.
More Industry News
The next bit of news for this week is that we get interesting data on the first Friday of each month, including the unemployment rate and the job creations information for the month (and more). There are a lot of reasons to believe that these numbers are going to be weak, which will be good for interest rates and bad for bonds.
That’s the analysis for now. From a mortgage perspective, we are seeing the 10-year treasury back under 4% for the first time this year. It feels good because it’s one of the things that is a psychological barrier that needs to be broken through.
We’ll see what happens with the numbers that come out on Friday. For now, we’ll keep our fingers crossed that we’ll continue to see improvements in interest rates.
Bill is happy to run the numbers for you, with no pressure.
