<h3> Will the FED Cut Rates Today?</h3>

It's Fed Day, but that isn't the big story at the moment. Right now, all eyes are on insurance giant AIG, which is in very serious trouble. The company is in desperate need of around $75 Billion and it has until today to shore up this capital, otherwise it could face bankruptcy. This story is far reaching as AIG is a worldwide company, with $1 Trillion in assets and operating in 130 countries.

Think about this - AIG provides insurance in all facets of life, from car to life insurance - and should AIG go bankrupt, claims around the world would not get paid - that is scary to imagine. We will see what happens in the next several hours as this story develops.

At 2:15pm ET, the Fed will release its interest rate decision and policy statement. Up until the last few days, there wasn't much of a chance for a Fed Cut - but as of this morning, the Fed Funds Futures are saying there is a 100% chance of a .25% cut and a 50% chance of a .50% cut. This is really amazing. We won't know for sure what will happen until later today - but with mounting issues in the financial sector, the Fed may just cut in an attempt to restore a sense of calm in the global financial markets. Should the Fed cut, Mortgage Bonds may not like this action because of its inflationary effects so stay tuned - prices are already down slightly on the day even in the face of heavy selling pressure in Stocks.

We hope the Fed doesn't cut, as they did when they panicked in January. We are just starting to see signs of inflation moderating, oil prices receding and the US Dollar strengthening. A Fed Cut would likely disrupt those nice trends. Should the Fed not cut - Mortgage Bonds may likely move another leg higher, but should they cut - we could see prices give up some of their recent gains. We see Mortgage Bonds moving higher in the longer-term, but a Fed Cut today could provide a speed bump and possible retracement in prices.

If you would like more information on how a federal interest rate adjustment will affect your future home purchase, you can contact Jody Mueller at 919-845-3715. Jody is with Alera Financial and he is wonderful at helping you get the best rate for your mortgage in these tough lending times!