Fed Watch
by Tom on October 29, 2008
in Market Musings, the Federal Reserve; market musings
I’ll have more this afternoon on the Fed’s decision, but I wanted to throw a couple of thoughts out there ahead of time:
1. Remember, there is not a specific link between what the Fed does and what the mortgage market does.
2. The market is pricing in at least a .5% cut in rates today.
Therefore, if we get .5%, we probably won’t see a huge reaction.
However, here’s my take on things:
The Fed is going to cut rates by .5%.
It won’t make a huge amount of difference in the market.
But the Fed’s statement will paint a rather bleak picture of the economy and that will restore the fundamental link between the economy and the mortgage/bond markets. Once that happens, we’ll see some easing in mortgage rates.
Stay tuned.
Good points here. A lot of people get confused about these things and it’s good to have articles that clarify.