What Does the Fed Rate Cut Mean To Mortgage Rates

Good question, and I wish I had an answer. Here's how I see it:The Fed cutting rates is typically a negative for long term rates. Adding liquidity to the system is in flationary and, therefore, bad for longer term rates such as mortgages. This morning the Federal Reserve held a paper auction which was not well received. This is a sign that Buyers think they will be able to buy the same paper, at lower prices (and, therefore, higher yields) in the near future.That said, the combination of occurances leads us to beleive that rates will, in the short term, move slightly higher.