The Fed Days of Bond Buying End

“Those were the days, my friend, we thought they’d never end….”

As expected, The Federal Reserve (Fed) stopped the printing press putting an end to its historic 6 year quantitative easing, bond buying program Wednesday while keeping its basic guidance of a near zero Federal Funds Rate for a “considerable time.”  The Fed said it was confident the US economic recovery would continue despite a global slowdown.

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Why the Bernanke Effect Roiled the Markets

Bernanke sounded a bit like the lyrics of Katy Perry’s tune Hot ‘n Cold last Wednesday during his testimony on the U.S. economy with the Joint Economic Committee. Instead of providing clarify to capital markets, his nuances created more confusion and uncertainty. The markets reacted violently with both stocks and bonds selling off in rapid fire.
 
The Fed is currently purchasing $85B/monthly of mortgage-backed securities (MBS) in their most recent version of quantitative easing. There has been … Continue reading

QE3, The Dollar, and YOU

Just over a week ago, the Federal Reserve swooped in to pump yet another dose of hallucinogenic dollars into our financial system with a third round of quantitative easing.  Printing money is the Federal Reserve’s remedy to our ailing economy. After four years of ultra-low interest rates, a stalled housing market, unemployment above 8%, and a tripling of the Fed’s balance sheet…the Fed is going to try quantitative easing one more time with a shot of steroids: no defined ending … Continue reading

Where Are the Jobs?

Jobs are the heartbeat of the US economy.  It’s not rocket science that without Jobs, the economy slows.  Jobs drive housing and consumer spending which in turn drives company sales and revenue.  Revenue, naturally, determines corporate expansion.

Each month the Labor Department gives us a read on Job creation.  And today it was dismal.  The expectation was for 185,000 jobs with 220,000 coming from the private sector, but was downgraded prior to the release. Continue reading

Printing Money Leads to Higher Mortgage Rates

Mortgage Interest Rates have taken a beating since November 4th, reaching their highest level since August. What we are seeing is a result of Quantitative Easing, round 2 (QE2). As I began writing, I watched this hilarious video QE Explained, which is an entertaining explanation of what’s happening. Enjoy.

So…now that you know all about QE2…how does this relate to mortgage interest rates? Continue reading

Mortgage Rates Jump Along with Housing Sales

Mortgage Interest Rates took a beating yesterday as Flower Mound, Texas lenders scurried to lock in rates for clients. Bonds look to be getting more of the same treatment today from changing sentiment towards the risk of inflation.  It seems investors are now betting the Fed will be successful in “creating inflation” with their upcoming Quantitative Easing that is expected to be announced next week. Read More about Quantitative Easing. Continue reading

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