The Fed's Meeting Minutes from July 29th were warmly received by the markets. They did add this sentence to their statement from before, "The path of the economy will depend significantly on the course of the virus." Second, during his press conference Fed Chairman Powell did mention that the economy has slowed recently, but they are not worried about a double-dip recession. Finally, the Fed has no plans to slow down Quantitative Easing as the Fed views the economic shock we are experiencing as disinflationary.

However Chairman Powell said they are close to wrapping up a review of it's long-term policy of wanting inflation at 2%. Brian Wesbury chief economist for First Trust Portfolios believes the Fed will let inflation run above 2% in the future for awhile since inflation has been below 2% for 10 years. Thus, he expects the Fed will be very slow to raise rates over the next several years.

However, if the Fed allows inflation above 2% bond market investors will have different ideas and expectations though when it comes to longer term rates like mortgages. Thus, we might see mortgage rates RISE in a couple of years even though short-term rates are at 0%.