For more proof that the Fed does not control mortgage rates, consider this:

In the immediate aftermath of the Fed’s decision to lower the Fed Funds Rate by 0.50%, mortgage rates improved by about 0.125% on average.

But, in the two days since, mortgage rates have not only given back those gains, but have approached their highest levels of the month.

This is because post-rate cut, the U.S. dollar is trading at all-time lows against the Euro and other currencies. Therefore, buyers of dollar-denominated securities such as mortgage bonds are getting less return for their investment.

When an investment loses its return, buyers tend to become sellers and that pushes the supply-and-demand balance to the supply side.

Additional supply of mortgage bonds drives down prices and increase mortgage rates.

It can be a complicated web, of course, but consider it to be additional evidence that the Fed Funds Rate and mortgage rates are unrelated.