The Fed Chair Can Help But Grandstand! The Press Conferences Have to Stop.

[Doug Smith]

The Federal Reserve lowered the Federal Funds Rate by 1/4%, so why did mortgage rates rise? Grandstanding! Let me explain. The Fed Funds rate is the short-term rate that banks can borrow money at. Mortgage Rates are driven by the bond market…in particular, the US Treasury Bond. Those rates, unlike the Fed Fuds rate, are market driven. In the past, Fed Chairs have been careful to only release a carefully-worded statement when they raise or lower rates so they didn’t “spook the market.” The last three Fed Chairs, however, hold a press conference 30-minutes after they announce their rate decision. They like the political spotlight. Inevitably, they say something really stupid to spook the market, You can set your watch by it…at 2PM, they lower rates and the rates drop. Then 30 minutes later, the Fed Chairperson prances to the podium to preen and, in doing so, firing a starting pistol sending the Treasury and Mortgage Rates up. When you hear “…but I heard they lowered rates”, well, they sort of did. Then they couldn’t keep their mouths shut. Let’s carefully watch rates over the next few days.

[Chris Seveney]

Quote from @Doug Smith:

The Federal Reserve lowered the Federal Funds Rate by 1/4%, so why did mortgage rates rise? Grandstanding! Let me explain. The Fed Funds rate is the short-term rate that banks can borrow money at. Mortgage Rates are driven by the bond market…in particular, the US Treasury Bond. Those rates, unlike the Fed Fuds rate, are market driven. In the past, Fed Chairs have been careful to only release a carefully-worded statement when they raise or lower rates so they didn’t “spook the market.” The last three Fed Chairs, however, hold a press conference 30-minutes after they announce their rate decision. They like the political spotlight. Inevitably, they say something really stupid to spook the market, You can set your watch by it…at 2PM, they lower rates and the rates drop. Then 30 minutes later, the Fed Chairperson prances to the podium to preen and, in doing so, firing a starting pistol sending the Treasury and Mortgage Rates up. When you hear “…but I heard they lowered rates”, well, they sort of did. Then they couldn’t keep their mouths shut. Let’s carefully watch rates over the next few days.

 We live in such a politically manipulated world today you have to push through the BS but at the end of the day, the major corporations run the country and will dictate pretty much everything.