The one immediate impact of the Fed’s move to increase its the pace of quantitative ease was a drop in mortgage rates to record lows and a subsequent boom in applications for refinancings. Presumably this will help shore up the housing market, allow banks to collect copious fees for mortgages laid off to Freddie and Fannie and put some cash in strapped consumers’ pockets very soon.
Combined with a few nascent signs of economic stability this month, this is supportive of the reflation trade.
