Financial Update by Maurice

QE2 (Quantitative Easing) by the FED is the plan to push $600 Billion dollars into buying mid range Treasury Bills in the hopes of keeping rates low. This helps to stimulate the economy as buyers have lower rates and hence, purchase more. The FED announced its buying plan on Wednesday and said it will buy $105 billion worth of bonds over the next month. How did the market react? Rates went up by an .125%.

This goes to show you that the FED policy helps to direct a market, but, ultimately Wall Street runs the market. The bond traders price the 10 year treasury’s which in turn govern mortgage rates.