Markets Waiting as FOMC Meeting Wraps-up Today

We all know what today is for the markets as it is all about the Federal Reserve. Their two-day FOMC meeting wraps up today and we could see mortgage rates adjust when they release their written statement in the next few hours.  Even though the Fed rate does not affect directly the mortgage rates, there is enough of a correlation that does implicate the market.  

Where Are Mortgage Rates Going?                     

>>> All eyes on the Fed – rates could adjust this afternoon

The Federal Reserve is front and center today for financial market participants as it is the final day of their Federal Open Market Committee meeting. The meeting will formally conclude this afternoon at 1:00pm with the release of a written statement outlining their current monetary policy outlook.

It has been widely anticipated for a couple months now by investors and analysts alike that the Fed will decide to raise the nation’s benchmark interest rate - the federal funds rate - by a quarter point, bringing the target range up to 1.50% - 1.75%. Since the markets have already priced this decision in, we should not see an immediate jump higher for rates once it’s finally written in stone.

However, that is not the only thing that investors will be looking for at today’s meeting. What everyone really wants to learn from this meeting is how the Fed feels about more rate hikes in 2018. Over the past few months we have talked about and received a smorgasbord  debating whether or not the Fed will take a more aggressive or cautious approach throughout the year. Back in February when the inflation reports were really coming out strong it seemed as though there might actually be a case for four rate hikes. Now, with recent inflation readings coming in on the softer side it’s not looking like that will happen.

You never know what the Fed will say, though, which is why everyone and their mother will be tuned in at 1:00pm to get the details. Today’s event is also notable because it’s the first time we will get a post-meeting press conference from the new Fed Chair, Jerome Powell. He will speak for about an hour starting around 1:30pm, fielding questions from journalists. The written statement is of course a huge insight into the inner-workings of the Fed but more often than not we learn more about the situation and rationale behind the decisions from the post-meeting dialogue.

Investors are getting anxious today as they anticipate the Fed’s rate increase, moving more into stocks and out of bonds. The yield on the 10-year Treasury note (which is the best market indicator of where mortgage rates are going) has moved today upward to its highest position in a month at 2.90%. Mortgage rates typically move in the same direction as the 10-year yield, and are similarly seeing some upward pressure today.

Rate/Float Recommendation           

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Mortgage rates are on the rise, even though we are seeing them sideways today.  Despite all of the fuss in the markets today, our outlook remains the same - mortgage rates should steadily rise in 2018, so most borrowers will likely get the better deal on a purchase or refinance by locking in a rate sooner rather than later.