Bonds continue to move higher on the heels of yesterday's Fed Meeting, where the Fed announced that they would purchase large quantities of Mortgage Bonds, and said they are ready to expand the purchasing program. The Fed also lowered the Federal Funds Rate by .75% to a target range of 0% to .25%, and also lowered the Discount Rate by .75% to .50%. The statement that followed the cut said that the Fed was prepared to take aggressive steps to revive the sagging US economy. Stocks also moved sharply higher yesterday on the news.

But it was a comment from the Fed that sparked yesterday's rally in Mortgage Bonds, when the Fed stated that they will buy as much as $600 Billion of debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-backed mortgage businesses in an effort to lower home loan rates. In the past, Mortgage Bonds have reacted negatively to Fed cuts as fears of inflation come to life. But the Fed went on to say that inflation pressures have diminished appreciably and expects inflation to moderate further in coming quarters.