16 Aug Markets Prepare for Release of Fed Meeting Minutes
Stocks are once again moving higher this morning. They have officially whipped out all losses absorbed from last week’s fallout that was blamed on tension that arose between the USA and North Korea. The problem is that the fall was well after the height of the tension which happened to be a strong say for stocks here in the US. Overall, the stock falls have primarily been technical moves that were followed by extreme strength. In fact, today we are once again within striking distance of challenging new all-time highs. As stocks continue to move higher, we will see additional pressure pushing mortgage bond prices lower. For the sake of mortgage rates, hopefully we will see stocks take a breather in the near term.
At noon today, the Fed Meeting Minutes from the July 26th FOMC meeting will be released. Generally speaking, the Fed has had a bullish tone for quite some time. Therefore, we anticipate the notes to talk about continued economic expansion as well as expectations for higher levels of inflation coming in the near to mid-term future. This will likely not be favorable for the bond market, so we could see volatility increase before and after the release. It’s no secret that September is the likely target start for Quantitative Tightening. Although most investors already anticipate this, it seems to stir fear each time it is mentioned by the Fed.
Mortgage interest rates continue to remain at favorable levels. Given the small room for improvement relative to the significant room for deterioration, we will maintain a locking bias.