Fed Sits as Congress Splits

"I'm on my way, I'm on my way home sweet home" - Home Sweet Home, Motley Crue

Last Tuesday, many politicians went "home" after the midterm election results and the day ended with a split of power between the House and Senate.

The markets and the Fed will now be watching to see if the split Congress can deliver a more fiscal policy or get caught in political gridlock. The latter would likely slow the pace of future Fed rate hikes.

Speaking of the Fed, they met on Thursday and, as expected, didn't raise rates. However, they offered some good news to both Stocks and Bonds by saying the labor market remains strong and inflation remains in check.

If inflation doesn't rise as the Fed forecasts through 2021, it is difficult to see long-term rates moving too high as inflation is the main driver of long-term rates.

Despite the bond-friendly Fed talk, home loan rates could not improve this week as investment dollars found their way back into Stocks which have rebounded nicely from the recent selloff

Bottom line - home loan rates remain near historically low levels and should continue to do so for the foreseeable future.

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