Wednesday, June 14, 2017

What's going on and why does it matter?

Mortgage bonds are drifting between their 30-day and 200-day moving averages as the market awaits the Fed's interest rate decision and monetary policy statement, which is scheduled for release at 2pm ET this afternoon. Although the market is anticipating that the Fed will hike short-term interest rates, all eyes will be focused on the Fed's statement and Fed Chair Janet Yellen's press conference afterward.  Bond investors will be looking for clues as to when the Fed may stop or slow down its massive bond-buying program. The risk for mortgage pricing is that the Fed may be further along in their exit plans than was previously anticipated. The Fed won't be buying any mortgage bonds today due to their meeting.

What should you do about it?

Watch for mortgage bonds to rebound off their 30-day moving average, but be prepared to lock your rate quickly if bonds break below that critical level of support.
MBS Chart

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