The power of Fed Chairman Bernanke’s words was felt on Wall Street this morning as mortgage bonds sold off in reaction to his speech on Capitol Hill Thursday evening. He said that the low interest rate environment will likely be needed for a while. However, he went on to say that as the economy heals, the Fed will hike rates quickly to ward off inflation. There is no doubt that rates will rise in the future, the question is not if but when.
It is unlikely that rates will be able to move any lower than levels seen in the past 2 weeks. Over supply of bonds continues to be an issue as yesterday's 30-year Treasury Bond auction was poorly received, as investors are searching for more yield. The Fed won’t be able to “sop up” this over supply much longer as their program for purchasing Mortgage Backed Securities winds down in 2010.
Next week brings us the release of a couple of very important economic reports and the release of the minutes from the last FOMC meeting. The bond market will be closed Monday in observance of Columbus Day, but the stock markets will be open for trading.
~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com
- Jeanette Eide
- Bellevue, Washington
- I’m a full-time professional Realtor specializing in residential resale and new construction in Seattle, Bellevue, Redmond, Kirkland, Issaquah, Newcastle, Sammamish, Bothell, Mill Creek, Snohomish, Everett, Woodinville, Kent, and Renton. Together with my husband Erik, we have over 17 years experience. We take the time to listen – getting to know you and establishing your exact needs. From there, our sole focus is getting you where you want to be, on time, in the smoothest manner possible. Together with our team of professionals, the closing of your transaction will be handled knowledgeably with the attention to detail you expect and deserve.
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