The Federal Reserve has lowered their Federal Funds Rate. As we have indicated, the move was expected – and the bond markets had strongly anticipated this move. But the Fed lowered their base rate by 0.5%, yet mortgage rates have moved down approximately 1.25% from their peak earlier this year. Why is that? Because the markets are expecting more moves by the Fed in the coming months. These actions will not take place before the elections as the Fed does not meet again until early November.

Not surprisingly, the Fed will be in their “blackout” or “quiet” period while the elections progress. The schedule is planned that way so that actions or words by the Fed do not affect the electoral process. In a normal month, the Fed Governors are blabbing away in front of Congress or giving addresses during economic conferences. But don’t expect any noise from the Fed as October comes to a close. On the other hand, the November meeting will start the day after the election—so that will be a wild and crazy week!

Meanwhile, we will soldier on with plenty of data in the month of October. We started the month with the September jobs report on Friday. In September the economy added 254,000 jobs – much more than expected. In addition, the previous two months of data were revised upward by 72,000 jobs, for a net gain of over 300,000 jobs. The headline unemployment rate fell one tick to 4.1%. And wage inflation grew by 0.4% from last month and 4.0% over the last year. Overall, a strong report which will make the Fed more reticent towards another large rate decrease. On the other hand, there will be plenty of data for the Fed to chew on before they meet again in four weeks.