Federal Open Market Committee (FOMC) Statement
Focus is on this afternoon’s highly important Fed events. They start with the adjournment of the FOMC meeting at 2:00 PM ET. There is a pretty wide consensus that new Fed Chairman Jerome Powell and friends will raise key short-term rates by a quarter point at this meeting. Since the move won’t come as much of a surprise if they do act, market participants will be focused on the Fed’s timetable for future rate hikes. The markets are currently expecting them to make three bumps this year, including this week’s. If the post-meeting statement gives any hints of a fourth rate hike this year, expect the bond market to react negatively and mortgage rates to spike higher. I believe there is some concern in the markets that this will happen. Therefore, if three hikes is reiterated, we could see an afternoon rally in bonds that leads to lower mortgage rates.