Posted To: Mortgage Rate Watch

This week, the Fed announced a reduction in its bond buying. In separate news, the big jobs report was much stronger than expected. Both of these events should have pushed rates higher. So why didn’t they? Let’s start with the Fed and its bond buying adventures (also known as QE or “quantitative easing”). The following chart of 10yr Treasury yields (a broad benchmark for “rates”) shows the paradoxical reactions to the Fed’s previous decisions to stop buying bonds. In other words, we knew a paradoxical reaction was a possibility , even though past precedent is never a guarantee. Beyond that, we also knew that rates were moving higher in anticipation of the Fed’s eventual exit. In fact, by last week, they’d already covered as much ground as they did in 2013. All that to say the reaction to the…(read more)

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Source: Mortgage News Daily