Technically, the stealth rally has taken us to major resistance, right at the low yield mark of 3.67%. A break and close below 3.67% is needed to confirm the upside move and project that further gains (lower yields better mortgage pricing) is in the cards. With most oscillators now neutral to bullish, the only fly in the ointment is growing overbought conditions on the chart. Seems like a good day to take advantage of the best Austin mortgage pricing in quite some time.
The market was doing just fine until the headlines broke the minutes of last month’s FOMC meeting (Fed Open Market Committee)
The market was doing just fine until the headlines broke the minutes of last month’s FOMC meeting (Fed Open Market Committee). The “Street” didn’t take kindly to comments regarding treasury asset sales, consideration of a .25 bps hike in the Discount Rate, and a general hawkish tone once they can determine that a recovery is “self sustaining”.
Fed is walking a tight rope, trying to sound confident and optimistic while still keeping the training wheels on the economy
Rumor mill bantering is talking about the Fed using “Reverse Repos” to drain dollars out of the system, taking away excess reserves. In general, this exercise is nothing new if explained in the proper context to the market. If it is labeled a policy change, the market will feel that this is the beginning of a shift in policy, one towards tightening/removal of accommodation. English translation would means higher interest rates. This kind of shift would cause forced selling in both bonds and stocks and not treat us mortgage types well. We believe it is a little too early in the recovery cycle for this type of policy change, given our current level of unemployment along with a number of other fragile components of the economy. No doubt the Fed is walking a tight rope, trying to sound confident and optimistic while still keeping the training wheels on the economy.