Houston's Rate Sheet

Minutes move Treasuries

Despite a very positive Index of Leading Indicators (a measure of short-term economic performance), there was little action in the bond market this morning. Bond Traders were waiting for the Fed Minutes to be released. The Fed Minutes are a written record of the Fed's most recent Federal Open Market Committee meeting. When they were finally released, the bond traders didn't like what they read. Treasury bond yields rose slightly and that means mortgage interest rates will continue in the same direction.

The Minutes revealed a Fed that is still concerned about inflation. Inflation is the primary concern of the Federal Reserve, and their primary tool to curb inflation is raising the costs of borrowing. If tomorrow's Consumer Price Index report shows the anticipated .05 percent increase in consumer prices, then you expect the Fed to raise rate once again. Although, the Fed's rate hikes don't directly affect mortgage rates, they tend to move in the same direction.

posted by Vincent Biondillo @ 1:44 PM