"TALENT WITHOUT DISCIPLINE IS LIKE AN OCTOPUS ON ROLLER SKATES. THERE'S PLENTY OF MOVEMENT, BUT YOU NEVER KNOW IF IT'S GOING TO BE FORWARD, BACKWARD, OR SIDEWAYS." H Jackson Brown Jr. And just like that strange visual of an octopus on skates, so goes the volatile Bond market in recent days - and last week, Bonds and home loan rates skated around, but ultimately closed out the week very close to where they had begun.

Bonds and home loan rates ended the week on a sour note, but had spent the early part of the week moving sideways and slightly higher on a blend of mixed economic news and action in the Stock market. Grim news arrived from insurance giant American International Group (AIG), who reported an enormous first-quarter loss of $7.81 Billion or $3.09 a share, compared with earnings of $4.13 Billion just a year ago. The important part of this loss is due to write-downs on Mortgage Bonds, which tells us that the credit crisis is not yet entirely behind us. On these negative headlines, Stocks moved lower and money flowed over into Bonds, helping home loan rates improve.

By Thursday, Bonds were looking good and holding their ground above several floors of technical support, as the weekly Initial Jobless Claims numbers were reported at 365,000, slightly below expectations of 375,000. The more closely watched four-week average of Claims edged higher to 367,500. This not-so-hot read on the labor market helped Bonds and home loan rates continue to improve.

But then on Friday, Bonds gave back some gains on news of oil hitting $126 per barrel - and the inflationary effects of high oil prices is bad news for both Stocks and Bonds. Oil prices are reaching exceptionally high levels, and may get higher still. Read on for where oil prices are forecast to go in the future - and what it means for home loan rates.

AND IT'S NOT JUST FILLING UP THE TANK WHERE YOU'RE SEEING PRICE INCREASES...IT'S WHEN FILLING UP YOUR BELLY AS WELL! THAT'S RIGHT, FOOD AND DRINK PRICES ARE ON THE RISE IN A BIG WAY. CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR SOME MONEY-SAVING TIPS!

After last week's thin economic calendar, where Stock market action and technical factors had a big impact on Bonds and home loan rates, this coming week brings a much juicier economic report agenda.

Retail Sales for April will be reported on Tuesday, followed by Wednesday's Consumer Price Index (CPI). This widely watched measure of consumer inflation will take special significance, now that the Fed has signaled their current rate cutting cycle may be at an end. On Thursday comes a read on the new construction housing market, with Housing Starts and Building Permits. We will have to see if these reports can keep Bonds above their 50- and 100-Day Moving Averages...as seen in the chart below. If the reports are economically weak or negative, Bond prices and home loan rates should hold their ground, and perhaps even find some improvement.

Remember when Bond prices move higher, home loan rates move lower...and vice versa. And right now, there's an important story breaking that will be very important to stay tuned in to. Last Friday, oil prices reached a lofty $126 a barrel, and Goldman Sachs is forecasting that black gold could rise even higher, perhaps as high as $150 - $200 a barrel in the next twelve months. If they are right, the inflationary effects of high oil prices could pressure Bond prices to move lower, causing home loan rates to move higher. This will be a story to watch carefully in the days and months ahead.

RISING PRICES NOT JUST AT THE GAS PUMP...

If you've noticed your grocery bill getting bigger lately, you're not alone - and it's likely not because you're eating more. According to Rising Food Prices: Policy Options and World Bank Response, global wheat prices have increased a whopping 181% over the past three years - and overall, food prices have increased by 83%!

Concerned? You're not alone. A recent poll showed that 73% of consumers cite higher grocery bills as a concern; with nearly half saying food inflation has caused a hardship for their households. In fact, food prices ranked just below record-high gasoline prices on the list of things people are worried about.

According to Gregory Karp, author of Living Rich by Spending Smart, here are three simple ways you can save when it comes to food and drink prices:

Time your grocery shopping. With the exception of milk, eggs, and bread, most grocery store products are put on sale at least once every 12 weeks, as Karp notes, often for "20%-30% their usual price." So instead of buying what you need every week or two, stock up on non-perishables when they go on sale. It may take a little planning ahead on your part, but the annual savings is substantial. As Karp writes, "The average American family of four spends about $8,500 on groceries each year. Trimming that bill by 20% saves $1,700."

Make eating out a special treat. Enjoying a nice meal out is always a fun thing to do, so let it be just that, a fun thing to do rather than a solution for being too tired or too rushed to cook. When you do have the time and energy to cook, make two or three times the amount and freeze the extras. Then, when you're rushed, a home-cooked (and probably healthier) meal will be waiting in your freezer, and will likely take less time to reheat than a night out or take-out delivery. And you will save more than time: According to Karp, "A restaurant meal for two costs $30 even at inexpensive chain restaurants. Home-cooked meals typically cost half as much, if not less. Convert two restaurant trips into two frozen homemade dinners each month, and you will save $360 per year."

Don't buy bottled water. Believe it or not, recent tests have shown that bottled water and tap water are pretty equal when it comes to safety and taste. For example, ABC News tested New York City tap water and bottled water for bacteria and found no difference in purity. Plus, there are environmental benefits of using less plastic. Karp estimates that people who drink one $6 case of bottled water each week can save $311 per year if they stop buying bottled water. He notes that "tap water costs five cents per gallon, or less than two cents per equivalent case - about $1 for the year."

Hey, if you eat...rising food prices impact you. Use the above tips and suggestions to help minimize your concerns about rising food prices, and stay healthy and smart.

Economic Calendar for the Week of May 12 - May 16

"LOOSE LIPS SINK SHIPS." Slogan from World War II Not just clever words of good advice, this phrase was actually part of the US Office of War Information's attempt to limit the possibility of people inadvertently giving useful information to enemy spies. Now fast forward to present time, as Dallas Fed President Richard "Loose Lips" Fisher's careless comments last week worked to sink the Bond market, and caused home loan rates to rise about .125%.

Fisher lived up to his nickname last week, almost uncontrollably blurting out off-topic comments and rhetoric during his speech in Mexico City, and roiling the financial markets every step of the way. Long recognized as an "inflation hawk", he was the lone dissenter against the .50% cut to the Fed Funds Rate on January 30th.

Fisher stated, "Monetary policy acts with a lag. I liken it to a good single malt whiskey or perhaps truly great tequila: It takes time before you feel its full effect. The Fed has to be very careful now to add just the right amount of stimulus to the punchbowl without mixing in the potential to juice up inflation once the effect of the new punch kicks in. ...My dissenting vote last week was simply a difference of opinion about how far and how fast we might re-spike the monetary punchbowl. Given that I had yet to see mitigation in inflation and inflationary expectations from their current high levels...I simply did not feel it was the proper time to support additional monetary accommodation."

The negative outburst by Lose Lips Fisher, which was again a departure from his prepared speech topic, didn't sit well with the Bond market. Bonds hate inflation, as higher inflation erodes the fixed payment return they offer over time. This sparked a sharp sell-off, causing home loan rates to rise.

AND THE ECONOMIC STIMULUS PLAN IS ALSO ON THE RISE, WITH SOME GREAT BENEFITS IN STORE FOR HOMEOWNERS AND HOMEBUYERS...BUT DO YOU KNOW HOW A BILL LIKE THIS ACTUALLY BECOMES LAW? DON'T MISS THIS WEEK'S INFORMATIVE MORTGAGE MARKET VIEW!

This week's economic calendar holds mostly mid-level reports, but the Retail Sales report on Wednesday will definitely draw some attention, as we get a chance to see how consumers have been spending money out there. Additionally, Thursday's Initial Jobless Claims and Balance of Trade reports and Friday's Industrial Production report will also be of interest.

Bond prices had been hanging from a ceiling of resistance, shown in blue on the chart below...almost reminiscent of a Salami hanging in a butcher shop or meat store - and last week saw prices fall off that ceiling, straight down through a floor of support at the 25-day Moving Average. And now - what was a floor becomes a ceiling, and Bonds have not yet been able to recover and climb back above this level.

The economic news and headlines in the coming week will determine if Bonds are able to drive back higher, through the 25-day Moving Average and help home loan rates improve. Weak, negative economic news would be bad news for Stocks, but help money flow over into Bonds and find improvement for home loan rates. Positive, strong economic news will have just the opposite effect though, and cause Bonds and home loan rates to worsen.

I'M JUST A BILL... AND I'M SITTIN' HERE ON CAPITAL HILL

The campaign trail isn't the only place you'll find politicians posing for the media and shaking hands. This week, members of the Senate reached across the aisle to pass an amended version of the $168 Billion Economic Stimulus Plan, including rebates for taxpayers, tax breaks for businesses, and new conforming limits for home loans. The bill now heads back to the floor of the House for approval of their amendments and then onto the President.

All this back and forth prompts the question... how does a bill actually become a law? The answer is... well... it's a long process. But, we can sum it up in a handful of major steps.

First, a bill is proposed in the House of Representatives and is sent to the appropriate committee for discussion. Next, the committee discusses and amends the bill, and then approves the bill for full House consideration. From there, the bill moves to the full House of Representatives for additional discussion and amendment before a vote is taken. If the House vote passes, the bill is sent to the Senate--where it is discussed, amended, and voted on again.

Of course, it's not over yet. Once the bill passes the full Senate vote, it moves to a conference committee to iron out any differences between the Senate and House versions of the bill. After the conference committee, the bill finally lands on the President's desk, where he (or who are we kidding, maybe she) can sign it into law or veto it.

The bottom line is, it typically takes a long time for a bill to become a law, and there are lots of discussions and amendments along the way. For a more humorous overview of the process that may bring back some memories, check out the old School House Rock - How a bill Becomes Law.

And, remember, the new Economic Stimulus Plan--with its new conforming loan limits--will go into law soon. If you've been thinking about refinancing or purchasing a new home, now is an excellent time and you could save big with the limits. Contact me to discuss how these new limits may help you!

Economic Calendar for the Week of February 11 - February 15

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only and is not intended for consumer distribution. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors.
As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

Michael Carew
NJ Lenders Corporation
20 Sheridan Avenue
Ho-Ho--Kus, N.J. 07423

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