The Federal Reserve hiked rates by 0.75% today and 30yr fixed mortgage rates moved moderately higher. Interestingly enough, those two things are fairly unrelated. The Fed Funds Rate (the thing the Fed “hikes” when you hear about the Fed hiking rates) applies to overnight loans among large financial institutions. It’s important, to be sure, but it only changes 8 times a year whereas securities in the bond market change every second of the day. There are all kinds of bonds. US Treasuries are the quintessential example. The yield on a 10yr US Treasury is the most popular benchmark for longer-term interest rates in the world. There are bonds that underlie the mortgage market as well (MBS or mortgage-backed-securities). They tend to move a lot like US Treasuries. There are even bonds that traders use to bet on the future level of the Fed Funds Rate. With that in mind, the bond market has LONG since assumed the Fed would hike 0.75% today and when the 0.75% hike actually happened, it didn’t have any impact on the rest of the bond market. In fact, Treasuries and MBS actually IMPROVED at first. The improvements were due to a change in the verbiage of the Fed’s policy statement. Traders were hoping to get some indication that the Fed was getting close to having a discussion about slowing the pace of rate hikes. While it was very carefully worded, today’s announcement arguably provided such a hint. Unfortunately, that wasn’t the last thing the Fed had to say today.