Both stocks and bonds are fairly flat so far today, as the markets await the anticipated results from the Fed meeting which are scheduled to be released on Wednesday. Remember the talk of “Tapering” that spooked the markets back in May? The talk that subsequently caused mortgage rates to spike more than 1% within a matter of weeks… Well, now there is chatter that the Fed will actually INCREASE their asset purchases…. Although at this point chances are low, it is interesting to note the change in “talk” among the analyst and pundits. With today’s surprisingly low housing report, you can be certain that it is at least a topic of discussion among the Fed members.
With markets somewhat stalled for the moment, those needing to close quickly or those who aren’t ready to stomach some volatility, locking is the safe play. Otherwise, we suggest carefully floating into the Fed decision in hopes of language that will help improve the bond market.