Hello All,
As we were talking yesterday, we found out that all though the Fed Rate Cut did not directly impact rates, the wave caused by this is hurting now. Bonds are currently down 38 basis points and we will more thank likely be seeing another mid day price change for the worst.
I know this topic can be confusing, so let me try to explain what is going on. The Fed's number one concern is containing inflation. This is currently at 2.2%. The target for the fed is 2% inflation per year. What impacts inflation, well we do......every time we buy an kind of goods from any retailer, we are impacting inflation. This drives the stock market and in return takes money out of bonds, resulting in worse rates. The reason the Fed Rate Hike in the first place was to slow buying and contain inflation from going up.
As time passes, we will see that the now 1/2% lower fed funds rate will continue to make an impact in wall street, our everyday lives, and the way investors are treating this, as a now stronger economy. Keep in mind, the stronger the economy, the worse the mortgage rates.
Thanks for Reading......Please feel free to respond or call 573-268-4698.
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