Why rates moved higher after the Fed cut

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Interesting end-of-the-week commentary from Lou Barnes explaining something we haven’t seen elsewhere: why some mortgage rates actually rose this week, even after the Fed’s half-point cut in rates: ‘As incredulous clients are learning, mortgage rates are higher now than last week, back up to 6.50% for vanilla 30-year. Yes, higher. ... Perfesser Bernanke probably has the same frustrated shoulder sag that we do: he played this thing exactly right, and has gotten nothing for his trouble but a run on the dollar.’

More: ‘ At this moment the economy receives some dinky benefit from the cut (Construction money is .50% cheaper -- wanna build a house? Short-term rates are down -- how about a nice new neg-am pre-pay-penalty ARM? No?), but the crunch is still in place, especially in mortgageland. ... The 10-year T-note, driver for all long-term credit, has soared from 4.35% to 4.70%.’

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