Mortgage Bonds sit at a critical level of support today, and if pricing falls through the blue line I’ve superimposed on the chart, rates will jump a good 0.25%-0.5% higher rather quickly.

The notes released this afternoon from the last FOMC meeting indicate that the Governors no longer see the U.S. entering a mild recession this year, but they do anticipate below-trend growth for the next two years.  That alone should have been enough to give mortgage pricing a boost and a hope for better interest rates ahead.

However, they also stated that inflation is still unacceptably high and they will closely monitor economic indicators to ensure that price pressures are satisfactorily declining before making any further rate decisions.  They meet again the third week in September.

Neither stocks nor bonds liked the tone of the revealed minutes, and both are down moderately.  Mortgage rates were re-priced intra-day for the worse.