"Fear comes from uncertainty," wrote the poet William Congreve.

Last week, however, the markets were moved by fear and by uncertainty that were unrelated. On the one hand, unrest in the Middle East drove up Oil prices and pushed investors into the safety of Bonds - while on the other hand, fear of inflation limited the gains that Bonds experienced. To see how those elements impacted home loan rates, let’s take a deeper look at each.

"You sound like a broken record..." or so the cliché goes

	And lately that saying certainly applies to the phrase the media has been repeating recently: Don’t fight the Fed.  So what does "Don’t fight the Fed" mean exactly,

Help Elderly Parents From a Distance

If you don't live close enough to mom and dad to help them with daily money tasks, there are professionals who can.
By Cameron Huddleston, Kiplinger.com

Regular readers of the Kip Tips column know that I've written a lot about helping parents with their finances because I have had to help my mother, who is diagnosed with Alzheimer's disease, with hers. In the March issue

"Should I stay or should I go now? If I go there will be trouble, and if I stay there will be double!" - The Clash

	The unrest in Egypt has been boiling for the past few weeks, as protestors took to the streets and Egyptian President Hosni Mubarak contemplated whether to stay in power... or step down.

"Bad news goes about in clogs, good news in stockinged feet." Welsh Proverb.

And there was certainly both good and bad news in last week’s Jobs Report. Here’s what we saw...and what this means for home loan rates. 

The Labor Department reported that just 36,000 jobs were created in January, with only 50,000 jobs created in the Private sector, much lower than the numbers anticipated. However, there were upward revisions to both November and December, which added another 40,000 jobs than previously reported. 

 
But that’s not the only bit of good news in the report. The Unemployment Rate fell to 9%, down from 9.4% last month, rather than increasing as had been expected. In addition, the U6 or "real" rate of unemployment, which includes discouraged workers and those who have accepted part-time employment for economic reasons, fell to 16.1%, from the previous month of 16.7%...and reflects the lowest level since April 2009!

So what does all of this mean when it comes to home loan rates?

It’s important to remember two things:

First, the Fed’s goals for their current Quantitative Easing policy (dubbed QE2) where $600 Billion is being injected into the economy are to (1) boost Stock prices, (2) create inflation, and (3) lower the unemployment rate.
Second, while these goals are designed to stimulate our economy and keep our recovery moving forward, they are also unfriendly to Bonds and home loan rates. 

In recent weeks, we’ve seen evidence of all three goals: Stocks been improving, the unemployment rate has declined, and we've seen an increase in global unrest of late, not just in Egypt, but in other parts of the world as well... and much of this centers around runaway inflation in commodities and food. 

This means that the old trading saying, "Don't Fight the Fed" is still ringing true. If the Fed wants to accomplish its three QE2 goals at the expense of Bonds and home loan rates, they probably will.