“Exceptionally low interest rates for an extended period of time” and announcing the decision to reinvest proceeds from maturing MBS/ Treasuries back into Treasuries is all to do about the markets.  The flip flop in policy is a clear sign that the Fed is concerned about the economy and will keep their foot on the gas to accommodate a wishful recovery.  Although yesterday’s trading session handled the news in stride, overseas markets (last night) didn’t like what they heard.  Stocks in Asia and Europe took a beating, spilling over to stateside trading this morning.

Currently, the Dow is off a smooth 200.  The Naz is not much better, off 60 points.  10 year notes are plus 20/32’s and mortgage backs are lagging behind, up 5/32’s.  With the Fed once again the lender and buyer of choice, expectations are that they will purchase 15 to 20 billion a month.  This move will keep Austin mortgage rates low as traders will adopt the old trading slogan, “Don’t fight the Fed”.   In the news, our June Trade Deficit grew 8 billion to a record 49.9 billion.  Imports grew, exports fall, in a simple formula that did the damage.  Once again, this will be a drag on GDP.

We do have an auction today.  24 billion of 10 year notes hit the tape at high noon (cst).  Look for this to be a bullet auction will traders falling all over themselves to buy.  Put up a chart and all you see is a major bull trend.  With the 10 year now at 2.71%, a breakout to lower yields/better mortgage pricing has been confirmed.

In this market, best bet for Austin mortgage borrowers is to take advantage of the historic low levels of Austin mortgage rates.