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With rising mortgage rates threatening the housing market's recovery and the employment sector showing signs of life, there was this pervasive nervousness on Wall Street pre-FOMC that the Fed would make a bold statement to keep the economy on track. This would have been awful for mortgage rates. More Fed action would have stoked inflation fears and inflation is a mortgage rate killer. But, because the Fed went the boring route, mortgage rates didn't move yesterday and remain in the same range they've been in all week.
Mortgage bond investors own the rights to mortgage bond payments over time and the value of those payment is tightly tied to the value of the U.S. dollar. And this is where the inherent conflict in the government's plan to drive down mortgage rates comes in. With each new stimulus, the government is forced to -- literally -- print more money, thereby making the plan more expensive to execute.
