The Dog That Didn’t Bark?
So, the Federal Reserve finished its massive, $1.25 trillion purchase of mortgage securities almost three weeks ago.
Have mortgage rates spiked upwards since then?
Nope, they’re basically unchanged.
What could that mean?
Other investors — supplying fresh capital — have taken their place (the “supply explanation”); a weak economy is keeping demand for mortgages — and therefore rates — low (the “demand explanation”); and/or the Fed’s exit was so loudly pre-announced that the bond market already anticipated it (“other”).
As they say, “buy the rumor, sell the news.”
Any other “Other” plausible explanations, anyone?
