Feds Cut Rate is not going lower and Mortgage Bonds love it!

FOMC Minutes for April 30, 2008

The Fed met today at 2:00pm ET to release the Fed Minutes Report regarding the April 30th meeting that resulted in a -.25% cut bringing the Feds Cut Rate to 2.00%.  They are still very concerned about inflation and unemployment.  The Fed believes the economy is still weak and will continue to be in the near future.  The Federal Reserve has decided not to continue cutting interest rates even with a sluggish economy.  The negative economic news is helping mortgage bonds as investors realize they will not continue to get bailed out by the Fed boosting the economy with further cuts.  This is one more reminder that Fed Rate Cuts do not equal lower Long Term Mortgage Rates.  In fact the absence of more Fed Cuts is benefiting Mortgage Backed Securities as investors buy up low risk mortgage bonds.