Good morning folks!
It is a rainy morning here in Minneapolis and the changing of seasons is being fully felt by me. A very different feeling than the past few years living in Northern California. My daughter is excited for snow. Let's hold off a bit on that, can we? :)
Okay, the announcement from the Federal Reserve Open Market Committee's meeting comes this afternoon.
For months I have expected this to the date that they announce the beginning of tapering of their Quantitative Easing (QE). The market has been talked there and this is still expected.
I think they will announce tapering to begin in October at a rate of $10-15 billion per month.
Mortgage rates have priced this in and we will likely see a rally in mortgage bonds (driving mortgage rates a little lower) on the news.
Also, I would not be surprised to see the Fed also announce something like lowering the unemployment rate target. The unemployment rate target is what they've communicated to the market as their trigger point for when they will raise their Overnight Rate.
By lowering the target they will give the market something to offset what they take away with the beginning of tapering.
It should make for an interesting afternoon.
Brett
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