This week's FOMC meeting has adjourned with an announcement of a half-point rate cut by the Fed in an effort to stimulate economic activity. The move was widely expected by market participants, but has still boosted stocks and hurt bonds. The Dow is currently up 218 points while the Nasdaq has gained 44 points. The bond market is currently down 17/32, which will likely push this afternoon's mortgage rates higher by approximately .250 of a discount point.

The post-meeting statement indicated that the Fed was still concerned about the economy and was expecting further weakness. This led to speculation that the Fed may lower short-term rates again in the future despite the fact that the Federal Funds rate is now at a record low of 1.00%. It has not been this low since June 2003 to June 2004. The fact that it appears the Fed has conceded more measures may be needed and is ready to act has helped drive stock prices higher during afternoon trading. This has made bonds less attractive to investors and is the reason we likely will see upward revisions to mortgage rates this afternoon.

The Commerce Department reported this morning that Durable Goods Orders for September rose 0.8% when they were expected to fall 1.0%. This means that manufacturing activity was stronger than expected, which is bad news for bonds and mortgage rates.