The Fed is Confused

The Federal Reserve released their Meeting Minutes from their last FOMC Meeting today. The most interesting part of the release showed that the Fed is unsure as to what the next step in their monetary process will be. In fact, they are not certain whether there will be any rate hikes in 2019, which is a bit more bullish than the market’s assumption that there will not be any hikes at all this year. The challenge is that although we are clearly at the end of an economic expansion cycle, there is a great deal of uncertainty as to whether the economy will strengthen to the point to where continued rate hikes are justified. This is an uncertain state for the stock market, and as we know, stock investors like certainty.

So far today, both stocks and bond markets are performing well. They are both responding to the Consumer Price Index report for the month of March that shows that the Core Rate of consumer inflation dropped from an annualized rate of 2.1% down to 2% even. This is good news for mortgage interest rates, which soften under times of tame inflation.

Given the news of the day, there is no reason to immediately rush in and lock. However, keep a careful eye on the markets and be prepared to lock should sentiment worsen.