Last week the stock market was taking some hits because Bernanke hinted once again that he may slow buying bonds at the clip of $85 Billion a month. Well the Board of Governors took turns during the week to clarify, that they will stand behind the economy for as long as it takes to get it on track. Well I found it confusing, but the stock market muddled through the week, now today, the start of the new quarter the stock market added a 1% gain.
I find this alarming that a quasi government agency can make pronouncements, and the stock market reacts. I like the way things are going, but really think we need to have the markets free from this bond buying process. I’d like to see interest rates float with the economy. I know mortgage rates rose a half of a point, to a full point during the week, but think they will recede again in order close some transactions in progress.
These random rumblings only make people think they can afford to make big financial commitments based on the way things are, rather than what might happen when we get past a highly manipulated market place. It continually surprises me that people are looking the housing market as a hedge against inflation when the Fed hasn’t been able to muster more than 2% inflation with Trillions of dollars added to the money supply.