Surprise, surprise, surprise. Fed Chairman Ben Bernanke and the other members of the Federal Open Market Committee stunned the credit markets with their announced plans to buy up to an additional $750 billion of mortgage-backed securities.
Market participants were further shocked by the Fed's plan to buy up $300 billion of longer-term U.S. government debt over the next six months. This event is nothing but mortgage market friendly and virtually assures mortgage interest rates will stay unusually low for an extend period of time.
The Fed chose to make no change to short-term interest rates - but that bit of news is almost akin to somebody asking what color Lady Godiva's eyes were. Who cares?!
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