Fed Minutes Hint At New Economic Stimulus
The Federal Reserve released its June 2011 Federal Open Market Committee meeting minutes Tuesday. It contained no surprises and, as such, mortgage rates have idled in the hours since.
The Fed Minutes is published 8 times annually, three weeks after each scheduled Federal Open Market Committee meeting. It’s the official log of the meeting’s conversations and debates.
The Fed Minutes is the lengthier companion piece to the FOMC’s more well-known, post-meeting press release. As compared to the brief-and-focused press release,by comparison, the Fed Minutes are long and detailed.
June’s press release was 458 words long. Its minutes totaled 6,889 words.
The June minutes reveal some interesting perspectives from within the Federal Reserve, too.
- On growth : Economic recovery had been slower than the committee expected
- On housing : The market remains depressed. Foreclosures are “holding back” construction.
- On rates : The Fed Funds Rate should remain low for an “extended” period
In addition, the Federal Reserve discussed whether a new round of economic stimulus was necessary. Committee members agreed that a poor outlook for employment in the medium-term would make this move more likely.
There was little that surprised Wall Street in the June Fed Minutes. This is why market reaction has been muted since its release.
The FOMC meets next August 9. If jobs data continues to weaken between now and then, expect the stimulus chatter to continue. It’s unclear, however, how this would impact mortgage rates.
For now, mortgage rates remain near their all-time lows, and they have much more room to rise than to fall. If you’re shopping for a loan, therefore, the timing is right for a lock.
August’s Fed Minutes Lead Mortgage Rates Higher
Home affordability took a slight hit this week after the Federal Reserve’s release of its August 10 meeting minutes.
The “Fed Minutes” is a lengthy, detailed recap of a Federal Open Market Committee meeting, not unlike the minutes published after a corporate conference, or condo association gathering. The Federal Reserve publishes its meeting minutes 3 weeks after a FOMC get-together.
The minutes are lengthy, too.
At 6,181 words, August’s Fed Minutes is thick with data about the economy, its current threats, and its deeper strengths. The minutes also recount the conversations that, ultimately, shape our nation’s monetary policy.
It’s for this reason that mortgage rates are rising. Wall Street didn’t see much from the Fed that warranted otherwise.
Among the Fed’s observations from its minutes:
- On the economy : The recession was deeper than previously believed
- On jobs : Private employment is expanding slowly
- On housing : The market was “quite soft” in June
Now, none of this was considered “news”, per se. If anything, investors were expecting for harsher words from the Fed; a bleaker outlook for the economy. And, because they didn’t get it, monies moved to stocks and mortgage bonds lost.
That caused mortgage rates to rise.
The Fed meets 8 times annually. Its next meeting is scheduled for September 21, 2010. Until then, mortgage rates should remain low and home affordability should remain high. There will be ups-and-downs from day-to-day, but overall, the market is favorable.
The Fed’s April Minutes Push Mortgage Rates Even Lower
After starting the day in the red, mortgage rates rebounded Wednesday afternoon after the Federal Reserve released its April 27-28, 2010 meeting minutes.
It’s good news for home buyers and would-be refinancers. Mortgage rates continue to troll along multi-year lows.
“Fed Minutes” are lengthy, detailed recaps of Federal Open Market Committee meetings, not unlike the minutes you’d see after a corporate conference, or condo association gathering. The Federal Reserve publishes Fed Minutes 3 weeks after each respective FOMC get-together.
The Fed meets 8 times annually.
Because of the minutes’ content and density, it’s of tremendous value to Wall Street and investors. Fed Minutes provide a glimpse into the conversations and debates that shape the country’s monetary policy.
The broad scope of the published meeting minutes are in sharp contrast to the more well-known, post-meeting press release which reads more like a policy summary.
And the extra words matter.
Here’s some of what the Fed discussed last month:
- On Greece : A crisis in Greece could slow U.S. domestic growth
- On housing : Despite government support, growth appears to have stalled
- On its mortgage buyback program : There’s little reason to sell mortgage bonds right now
When the markets saw the Fed Minutes, what had been a down day for bond markets turned positive. The less-than-sunny outlook for the near-term U.S. economy sparked bond sales, pushing prices higher.
Mortgage rates move opposite mortgage bond prices.
Wall Street is always in search of clues from inside the Fed about what’s next for the economy and post-FOMC minutes usually give good fodder. April’s meeting was no different.
For now, mortgage rates remain near all-time lows but once the Eurozone issues are settled, rates are likely to rise. If you haven’t locked a mortgage rate, your window may be closing. Once the economy is turning around for certain, mortgage bonds will be among the first of the casualties.
