AgentIndustry News

Fed less optimistic about economy

New low-wage jobs aren't enough to stir inflation

Mortgages reached the mortgage-rate low for the week (and the year) immediately following the Fed's meeting on Tuesday. Since then, low-fee, 30-year rates have drifted up from 5.25 percent toward 5.5 percent. The Fed's post-meeting statement was slightly less optimistic than in January, and its repeated mention of "patient" intentions has pushed the threat of a rise in the 1 percent overnight cost of money out into 2005. The "carry trade" – borrowing short to buy long bonds – is dangerous, but the 2.75 percent spread between overnight and 10-year T-notes is lucrative, and the tether holding mortgage rates in the fives. I can't imagine mortgage rates going lower unless we get some news of a general economic slowdown – heresy to the talking heads on all the financial shows, but not to the Fed. When it says that risks to the economy are balanced, as is the risk of an "unwelcome fall in inflation," the Fed means exactly what it says. So, how do we square the Fed's con...

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