By Ben Bauer
Mortgage Bonds are near unchanged levels, trapped beneath resistance at the 25-day Moving Average. Traders appear to be sitting on their hands ahead of next week’s big event … the Fed Meeting. Fed Fund Futures are showing an 87% chance of a rate hike next week and most likely to the tune of 0.25%, up from an 83% chance on Tuesday. The 2-day meeting kicks off on Tuesday and ends on Wednesday with the monetary policy statement at 2:00pm ET. And this from our friend and expert adviser for the Mortgage Market Guide, Elliot Eisenberg, Ph.D. -With a Fed rate hike a forgone conclusion, the next three issues of concern are how gradually will the Fed raise rates, when does the Fed stop reinvesting interest and principal from their $4 trillion portfolio of Treasuries and agency debt (Fannie and Freddie), and, last but not least, do we return to a zero fed funds rate in a future recession? The answers: very slowly, July and yes! To receive Elliot’s Daily Brief Blog, go to www.econ70.com/. In global central bank news, the Swiss National Bank held its main policy rate at 0.5%, while the Bank of England held its benchmark rate at 0.50%. At 1pm ET, we will see $13B in 30-Year Bonds get sold by the Treasury … this could send a little ripple in prices, so stay tuned. Technically, the Bond is smack in the middle of a trading range. It would be ideal to float new files all the way to next week’s Fed Meeting, just to see how Bonds react. But of course, that is if the Bond Market will allow us. If sentiment changes, and Bonds slide lower from here, we will quickly change back to our locking stance.