Monday's bond market has opened in negative territory despite another round of stock market losses. The major stock indexes are kicking the week off with sizable losses. The Dow is currently down 160 points while the Nasdaq has fallen 30 points. The bond market is currently down 53 basis points, which will likely push this morning's mortgage rates higher.

There is no relevant economic news scheduled for release today. The rest of the week brings us the release of five economic reports for the markets to digest. Three of them are considered to be of low importance and likely will have little impact on mortgage rates. With none of the data being released until Wednesday, we will likely see the most activity in rates the latter part of the week.

The first piece of data comes Wednesday morning with the release of August's Existing Home Sales report. The National Association of Realtors posts this data, giving us an indi cation of housing sector strength by tracking home resales in the U.S. It is expected to show a decline from July's sales, however, this data is not considered to be of high importance to the bond market.

August's Durable Goods Orders will be posted early Thursday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for a drop in orders in the neighborhood of 1.3%. A larger decline could help bond prices and cause mortgage rates to drop Thursday. However, a smaller than expected decrease would indicate a stronger than expected manufacturing sector and would likely help push mortgage rates higher.

Also Thursday morning will be the release of August's New Home Sales. It is expected to show that sales of new homes rose slightly in August. As with Wednesday's Existing Home Sales data, this report will likely not have a significant impact on mortgage ra tes.

The first of Friday's two releases is the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don't see this revision having much of an impact on the financial markets or mortgage pricing. It is expected to show a slight increase from the previous estimate of a 3.3% annual rate.

The final report of the week is Friday's release of the University of Michigan's Index of Consumer Sentiment. This is the revised reading for September. The preliminary reading that was released earlier this month revealed a 73.1 reading. Analysts are expecting to see a downward revision, meaning confidence was not as higher as previously thought. A lower than expected reading should help improve mortgage rates Friday morning.

                        Mel

Tuesday's bond market has well in negative territory following a stock rebound that has shifted funds back away from bonds. The stock markets are rebounding after yesterday's walloping with the Dow up 485 points and the Nasdaq up 98 points. This means that the major stock indexes have recovered approximately two-thirds of yesterday's losses. The bond market benefited from yesterday's stock sell-off but is suffering today as investors move funds back into stocks. The result is the bond market down 99 basis points that will likely push this morning's mortgage rates higher.

Today's only economic news was September's Consumer Confidence Index (CCI). It showed a reading of 59.8 that was much higher than forecasts had called for. Analysts were expecting to see a reading of 55.0, meaning that consumers had more confidence in their own financial situation than was expected. This is considered bad news for bonds and mortgage rates because it indicates that consumers are more willing to make large purchases in the near future.

Tomorrow only relevant data is the Institute for Supply Management's (ISM) manufacturing index for September. This index gives us an indication of manufacturer sentiment. Analysts are expecting to see a 0.4 decline from last month's 49.9 reading. The 50.0 benchmark is extremely important because a reading below that level means more surveyed executives felt business worsened than those who said it had improved. This data is important not only because it measures manufacturer sentiment, but it is very recent data. Some economic releases track data that are 30-60 days old, but the ISM index is only a few weeks old. If we get a smaller than expected reading, I expect to see the bond market rally and mortgage rates fall tomorrow morning.

We need to keep an eye on the stock markets and Fed bailout attempt. I don't think we will see much come today as the markets take a breather, but we probably will see more volatility in stocks before the end of the week. This could affect bond prices and mortgage rates. Generally speaking, look for stock weakness to lead to bond gains and lower mortgage rates as investors move funds into the safety of bonds. If the stock markets continue to move higher, we should see bonds suffer and mortgage rates move higher.

                   Mel

Friday's bond market has opened in positive territory following a negative open in stocks and weaker than expected economic news. The markets are reacting more to news of the possible failure of the Fed bailout than today's economic data. The stock markets are showing losses with the Dow down 65 points and the Nasdaq down 35 points. The bond market is currently up 9/32, but I don't believe we will see much of a change in this morning's mortgager rates.

Neither of today's economic releases are considered to be of high importance, but both gave us results that were favorable to bonds. The first was the final revision to the 2nd Quarter Gross Domestic Product (GDP) that showed a revised rate of growth of 2.8%. This was a sizable downward revision to the previous estimate of a 3.3% annual rate and lower than analysts had expected for this revision. This means that the economy grew at a slower rate than many had thought during the 2nd quarter of the year.

The second report of the day and the final report of the week was the revised reading of the University of Michigan's Index of Consumer Sentiment. The preliminary reading that was released earlier this month revealed a 73.1 reading, but today's update showed a 70.3 reading. This was also lower than forecasts and hints that consumers are less optimistic about their own financial situations than thought, which usually means they are less likely to make large purchases in the near future.

                   Mel

Thursday's bond market has opened in negative territory after the stock markets have opened with strong gains. Stocks are rallying after some of the hurdles that may have prevented the bailout plan from being approved appear to have been tackled. The result is the Dow up 258 points and the Nasdaq gaining 38 points. The bond market is currently up 12/32, which will likely push this morning's mortgage rates higher.

The Commerce Department gave us August's Durable Goods Orders results this morning, saying that new orders for big-ticket items fell 4.5% last month. This drop was over four times analysts' forecasts, meaning that the manufacturing sector was much weaker than thought. This is considered to be good news for bonds and mortgage rates because slowing economic activity will likely ease inflation concerns and make long term securities such as mortgage-related bonds more attractive to investors.

August's New Home Sales were also posted this morning, showing that sale of newly constructed homes fell to their lowest level since October 1991. This strongly indicates that the housing sector is still weakening and not ready to bottom out yet. That is also good news for the bond market and mortgage rates.

There are two reports scheduled for release tomorrow. The first is the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don't see this revision having much of an impact on the financial markets or mortgage pricing. It is expected to show a slight increase from the previous estimate of a 3.3% annual rate.

The final report of the week is Friday's release of the University of Michigan's Index of Consumer Sentiment. This is the revised reading for September. The preliminary reading that was released earlier this month revealed a 73 .1 reading. Analysts are expecting to see a downward revision to 70.9, meaning confidence was weaker than previously thought. A lower than expected reading should help improve mortgage rates tomorrow morning.

                   Mel

Wednesday's bond market has opened in positive territory in what hopefully is a sign of stabilization. The stock markets are mixed with the Dow up 62 points and the Nasdaq up 24 points. The bond market is currently down 3/32, we will likely see this morning's mortgage rates move higher due to weakness late yesterday.

Today's only economic news was the release of August's Existing Home Sales report. The National Association of Realtors reported that home resales in the U.S. fell more than expected last month. This indicates that the housing sector has still not bottomed out. That is good news for bonds because a soft housing sector will likely slow economic activity and ease inflation concerns.

Fed Chairman Bernanke is speaking to a Joint Economic Committee of Congress today, where he has basically warned that the Fed bailout program needs to be enacted quickly to stabilize the financial system. His words have led to some fluctuation in the markets this morning, but don't seem to be of significant surprise to traders. Accordingly, I don't believe we will see any further changes to mortgage rates as a result.

August's Durable Goods Orders will be posted early tomorrow morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for a drop in orders in the neighborhood of 1.3%. A larger decline could help bond prices and cause mortgage rates to drop tomorrow. However, a smaller than expected decrease would indicate a stronger than expected manufacturing sector and would likely help push mortgage rates higher.

Also tomorrow morning will be the release of August's New Home Sales. It is expected to show that sales of new homes rose slightly in August. As with today's Existing Home Sales data, this report will likely not have a significant impact on

mortgage rates.

                   Mel

Wednesday's bond market has opened in positive territory following significant losses in the stock markets. The Dow is currently down 305 points while the Nasdaq has lost 73 points. The bond market is currently up 9/32, but we will still see an extremely large increase in mortgage rates compared to yesterday's.  

This morning's stock weakness is a result of more concerning news in the financial sector, particularly the need for the Fed to intervene in the AIG crisis and other related issues. The stock markets managed to rally late yesterday after the Fed meeting adjourned, leading to selling in bonds that affected this morning's mortgage pricing. Despite today's stock weakness, the bond market cannot overcome its concerns nor erase the losses from yesterday that are helping to drive mortgage rates higher this morning.

Today's only relevant economic news was the release of August's Housing Starts that showed new starts for homes fell to a 17 year low last month. This was a level that was much weaker than analysts had expected. However, because this data is not considered to be of high importance to the markets, its impact on this morning's mortgage rates has been limited.

The Labor Department will give us weekly unemployment claims tomorrow morning. They are expected to show that 440,000 new claims for benefits were filed last week. This would be a slight decline from the previous week.

Late tomorrow morning, the Conference Board will release its Leading Economic Indicators (LEI). This index attempts to measure economic activity over the next three to six months. If it estimates an increase in activity, the bond market will probably fall and mortgage rates will rise slightly. If it shows weaker than expected readings, the bond market may rally and mortgage rates should f all. Current forecasts are calling for a 0.2% decline from July's reading.

I am still expecting to see more volatility in the markets and potentially mortgage rates. Accordingly, please maintain fairly constant contact with your mortgage professional if you have not locked an interest rate yet.

                   Mel

Tuesday's bond market has opened in positive territory again as yesterday's frantic buying has carried into this morning's trading. However since the opening bonds have lost ground, they are currently down 47 basis points. The stock markets are showing gains compared to yesterday's massive sell-off that had the Dow closing down over 500 points. The Dow is currently up 120 points while the Nasdaq has gained 16 points.

Today's only relevant economic data was August's Consumer Price Index (CPI). It showed a decline in the overall reading of 0.1% and an increase of 0.2% in the core data reading. Both of these readings matched forecasts, therefore, they have had little impact on the bond market or mortgage rates.

The biggest influence on this morning's trading is still the financial sector woes and the stock markets. There is still talk of more bank and financial company collapses that could still create widespread panic in the markets. The spotlight is currently on insurance giant AIG and its ability to continue to remain solvent. Whether or not that will be accomplished remains to be seen. However, the markets often overreact to a crisis and then correct. The stock volatility that came as a result of news from the past few days has certainly benefited bonds as investors seek safe-haven. But, I suspect that this may end in the immediate future, hence the extended lock recommendation yesterday. I am going to hold the lock recommendations for the time being as any type of correction in stocks could drive bond prices sharply lower and create a significant spike in mortgage rates.

The FOMC meeting adjourned at 2:15 PM today. The recent financial and bank news has some analysts now thinking that the Fed may lower key short-term interest rates at this meeting. I don't believe that to be the case and that the Fed will leave rates unchanged. However, I would not be surprised to see the post-meeting statement address the recent events. Depending on what is said or addressed in the statement, we may see another round of volatility in stocks and bonds during afternoon trading today.

                   Mel

Monday's bond market has opened up sharply following a steep sell-off in stocks during early trading. The stock markets are reacting to news that Lehman Brothers filed for bankruptcy and other related financial sector news. This has pushed the Dow lower by 250 points and the Nasdaq down 33 points. The bond market is currently up 99/32, which should improve this morning's mortgage rates by approximately .500 of a discount point.

The news the Lehman was unable to find buyers for its businesses and filed for bankruptcy protection has significantly raised concerns that the financial sector of the market is nowhere near stabilizing and has many fearing that more collapses may be coming in the near future. There are concerns about other banks and financial services companies on the verge of collapse that could create turmoil in international markets also. The benefactor to this news and concern is the bond market as investors seek safe-haven from the volatility. Whether this spike in bond prices will hold is unknown at this time, but what is a safe bet is that more news like this weekend's reports could make mortgage-related bonds much more attractive to investors and may lead to a downward trend in mortgage rates.

Also contributing to this morning's bond gains was a much larger decline in industrial production than analysts had expected. This morning's release of August's Industrial Production report revealed a 1.1% decline in factory output. This was much weaker than analysts' forecasts of a 0.3% decline and indicates that the manufacturing sector was weaker than thought in August. This is good news for bonds and mortgage rates because slowing economic activity eases inflation concerns.

Tomorrow morning brings us the release of August's Consumer Price Index (CPI). This is one of the most important reports we see each and every month. It is considered to be a key indicator of inflation at the consumer level of the economy. There are two readings in the report- the overall index and the core data reading. Current forecasts are calling for 0.1% decline in the overall reading and a 0.2% rise in the core data reading. A larger increase in the core data would likely lead to higher mortgage rates tomorrow, while a smaller increase would be good news.

The FOMC meeting will adjourn at 2:15 PM tomorrow. There is little debate about a possible change to key short-term interest rates at this meeting. The overwhelming consensus is that there will be no change to rates at this meeting. However, the post-meeting statement could very well lead to volatility during afternoon trading as investors dissect it in an effort to find the Fed's expected next move. The wild card is how the markets react to the statement. If we see significant weakness in stocks, the bond market may benefit as a safe-haven from the volatility. This could lead to lower mortgage rates tomorrow afternoon and Wednesday morning.

                        Mel

Friday's bond market has opened fairly flat despite sizable stock losses during early trading. The stock markets are showing losses as investors worry about the future of Lehman Brothers. There is growing concern that the 158-year old financial institution will fail if not sold or if other drastic measures are not taken very soon. The result is renewed fears about the stability of U.S. banks that has pushed the Dow down 11 points and the Nasdaq up 3 points. The bond market is currently down 1 15/32.

The Commerce Department gave us today's first piece of relevant economic news with the release of August's Retail Sales data. They reported that sales fell 0.3% last month when it was expected to rise by the same amount. This means that consumers were much less active than many had thought. However, this is good news for the bond market and mortgage rates.

The second of today's three releases was August's Producer Price Index (PPI). It showed a 0.9% drop in the overall reading, meaning that prices paid at the producer level of the economy fell by a wider margin than what was thought. This is good news for the bond market, but the more important core data reading matched forecasts with an increase of 0.2%. Overall, this report can be considered somewhat favorable to bonds and mortgage rates.

The last report of the week was the University of Michigan's Index of Consumer Sentiment late this morning. It indicated that consumers were much more optimistic about their own financial situations than many analysts had expected. The 73.1 reading was much higher than the 64.0 that was expected. This reading is considered bad news for bonds and mortgage rates because consumers tend to spend more when they have more faith in their own financial situation.

Next week is fairly active in terms of economic releases with several scheduled that can influence mortgage rates. The first comes Monday morning with the release of August's Industrial Production report. It will be posted mid-morning Monday and is considered to be of moderate importance to the markets. Look for more details on next week's events in Sunday's weekly preview.

                   Mel

Wednesday's bond market has opened in negative territory as investors sell holdings to capture profits from the recent rally. Stock gains are also contributing to the weakness in bonds with the Dow up 70 points and the Nasdaq up 17 points. The bond market is currently down 9/32, but we will likely see a slight improvement in mortgage rates due to strength in bonds late yesterday.

There is no relevant economic news scheduled for release today. Tomorrow brings us the release of the first economic report of the week but it is not considered to be of high importance. July's Goods and Services Trade Balance data will be posted tomorrow morning, giving us the size of the U.S. trade deficit. It is expected to show a deficit of approximately $58.0 billion, which would be an increase from June's $56.8 billion. However, I would consider this the least important of this week's releases, meaning it will likely have little impact on bond trading or mortgage rates.
Also tomorrow is the release of weekly unemployment figures.

The Labor Department is expected to show that 440,000 new claims for benefits were filed last week. A significantly higher or lower number may influence trading enough to affect mortgage rates. However, it is more likely that this release will have little impact on rates, especially with the important data that is scheduled for release Friday morning.

We will see three relevant reports posted Friday, two of which are very important to the markets. They are August's Retail Sales report and Producer Price Index (PPI) and September's University of Michigan Index of Consumer Sentiment. This makes Friday the most important day of the week, meaning we may see plenty of movement in rates Friday.

Monday's bond market has opened down slightly following strong gains in stocks. But rebounded quickly as the market digested the Fed’s actions this weekend taking over Fannie Mae and Freddie Mac. The stock markets also rallied as the news of the government's takeover of Fannie Mae and Freddie Mac is being taken as positive for the markets. Also contributing to early stock gains were rallies in international markets overnight. The bond market is currently up 109 basis points. We are seeing conforming interest rates around 5.625% at 1 point. We haven’t seen rates this low since early in the year.

This week brings us the release of four pieces of economic data, with three of them likely to affect mortgage rates. There is no relevant data scheduled for release until Thursday and the most important reports are all scheduled for release Friday. Therefore, look for the biggest changes to rates the latter part of the week.

The first report of the week is not considered to be of high importance. July's Goods and Services Trade Balance data will be posted Thursday morning, giving us the size of the U.S. trade deficit. It is expected to show a deficit of approximately $58.0 billion, which would be an increase from June's $56.8 billion. However, I would consider this the least important of this week's releases, meaning it will likely have little impact on bond trading or mortgage rates.

Overall, the latter part of the week will likely be pretty active for the bond market and mortgage rates. Friday's Retail Sales and PPI reports are the week's most important and make Friday the biggest day of the week. If we see weaker than expected readings in that data, we should see mortgage rates move lower for the week. However, stronger than expected readings will likely drive bond prices lower and mortgage rates higher.

I am holding the float recommendations for now, but could change if there is a lackluster interest in the 10-year auction or if Friday's data shows stronger than expected results. We may also see the stock markets significantly influence bond trading, so look for sizable movement in the major indexes to also lead to a possible change in recommendations.

                   Mel

Friday's bond market closed in negative territory, even though we opened up in rally mode based on the release of weaker than expected employment numbers. The stock markets are showing another weak trading day with the Dow closing up 32 points and the Nasdaq down 3 points. The bond market is currently down 19/32.

The Labor Department posted August's Employment figures this morning, saying that the unemployment rate spiked to a five year high of 6.1% when it was expected to remain at 5.7%. They also reported that the economy lost 84,000 jobs last month, exceeding the forecasted decline of 75,000. Both of these numbers are favorable to bonds and mortgage rates because they indicate a weakening employment sector.

A bit of negative news for bonds was the average hourly earnings readings that rose 0.4%. This was 0.1% higher than was expected, but not enough of a concern to prevent stocks from falling and bond prices from rising.

Next week is fairly light in terms of the number of economic reports scheduled for release. However, two of the reports on the calendar are considered to be very important to the markets and mortgage rates.

                   Mel

Wednesday's bond market has opened flat despite a stronger than expected economic news. The stock markets are showing early losses with the Dow down 56 points and the Nasdaq down 22 points. The bond market is currently nearly unchanged, but we will still likely see an improvement in this morning's mortgage rates.

The Commerce Department released July's Factory Orders data this morning, revealing a 1.3% increase in new orders. This report measures manufacturing sector strength and is similar to last week's Durable Goods Orders, but includes orders for both durable and non-durable goods. Analysts' latest forecasts were calling for an increase of 0.8% in new orders, meaning manufacturing activity was stronger than expected. However, the data's impact on trading and mortgage rates has been fairly minimal this morning.

Later today, the Federal Reserve will release its Beige Book report. This report details current economic conditions in the U.S. by region. It is believed to be a key source of data when the Fed meets for their FOMC meetings. It is usually released approximately two weeks prior to each FOMC meeting. If the 2:00 PM ET release reveals any significant surprises, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed's next interest rate move. Most likely though, it will be a non-event and will not lead to a change in mortgage rates.

Tomorrow morning brings us the revision to the 2nd Quarter Productivity numbers, which measures employee productivity in the workplace. It is expected to show an upward change from the previous estimate of a 2.2% annual pace. Forecasts are currently calling for a reading of 3.4%, which would be good news for the bond market and possibly lead to slightly lower mortgage rates tomorrow morning.

                   Mel

Tuesday's bond market has opened in negative territory following early stock gains. The stock markets are starting this shortened week with strong gains as the Dow is up 97 points and the Nasdaq is down 1.87 points. The bond market is currently up 19/32, an improvement from this mornings negative opening.

The Institute for Supply Management posted their manufacturing index late this morning, showing a reading of 49.9. This was very close to last month's reading and slightly higher than forecasts, but has not had much of an influence on this morning's trading or mortgage pricing.

Tomorrow morning brings us the release of July's Factory Orders data. This report measures manufacturing sector strength and is similar to last week's Durable Goods Orders, but includes orders for both durable and non-durable goods. This data is expected to show a 0.4% increase in new orders. A smaller than expected rise should lead to lower mortgage rates Wednesday.

Also scheduled for release tomorrow is the Federal Reserve release of its Beige Book report. This report details current economic conditions in the U.S. by region. It is believed to be a key source of data when the Fed meets for their FOMC meetings. It is usually released approximately two weeks prior to each FOMC meeting. If the 2:00 PM ET release reveals any significant surprises, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed's next interest rate move. Most likely though, it will be a non-event and will not lead to a change in mortgage rates.

Overall, I expect to see the most movement in rates Friday due to the importance of the Employment report. I am holding the short-term lock recommendations for the time being, but this does not mean that I think rates will necessarily move higher. It means that I feel the risk verses the potential reward of continuing to float an interest rate is leaning heavily towards the risky side. Accordingly, locking seems to be the prudent position at this time if closing in the immediate future.

                   Mel