What turned in to being probably the most anticipated Fed meeting adjournment with its policy statement following shortly thereafter, turned out to be a big flop. Mortgage backed securities were literally flat at 0 the last I looked and the DOW was down 23 after traders digested the information.
Two of the big statements in the policy note was that “The pace of economic contraction is slowing and conditions in financial markets have generally improved in recent months.” This typically would have caused stock to rally and bonds to sell of causing mortgage rates to worsen but the next paragraph goes on to explain that “inflation is to remain subdued for some time.” Had there not been the preceding statement, this would have caused mortgage bonds to rally and stocks to falter, so they pretty much canceled each other out.
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