On the day before the much anticipated Fed meeting, Philadelphia home buyers should consider cautiously floating their loans. Bond prices have slightly fallen today primarily due to Alan Greenspan’s continued fear of inflation. Although Greenspan is the former chairman of the Fed, he still holds a great deal of respect in economics and people tend to listen. Another factor of this marginal bond change was the NY Empire State Index falling below expectations of 18 to 14.7.
Bonds seem to be in limbo right now awaiting the Fed’s economic report tomorrow, September 18th. It is expected that the Fed will cut interest rates either 25 or 50 basis points. The reason for this cut revolves around the troubled credit markets following the collapse of subprime mortgages. Traditionally this increases bond prices; however, amongst the concern of inflation, negative news on inflation could adversely affect bonds. So keep an eye on the Fed report tomorrow and consider cautiously floating loans today.
By, Joe Brady