First lets take a quick look at last week: Last week ended up being a GREAT week for mortgages with only 1 negative day, but overall a gain of 25/32nds in price in Fannie 30years. That translates into a nice improvement on rate sheets!  What is amazing about this is we had enough negative news that had the potential to raise rates. The 10 year auction did not go well, and the Fed said they would stop buying Treasuries at the end of September... Both BAD news for the credit markets. Yet the market shrugged off the bad news and we saw a nice improvement in interest rates.

So What's up for this week? We have a hand full of data to chew on and at the end of the week Bernake speaks. Here is the calendar:

• Monday August 17: well, another no news Monday but a happy market that is trading nicely in positive territory.
• Tuesday Aug 18: July Housing starts and building permits expected up 3.0% and up 1.7%. At the forecast levels we may see a bit of a bump up in rates, but there is a chance the unemployment and perceived stricter Underwriting standards have kept buyers out of the market... if we see a weak number because of this we will see a little improvement in rates.
• Tuesday: July PPI expected -0.3% with a core of +0.1%. The core is the important one here, at the forecast levels growth is weak enough to hold rates steady. The headline number looks week, but energy prices were down in July making the number look weaker than it really is.
• Wednesday August 19: another no news day. In the absence of data look to stocks to guide the credit market. Good days for stocks will be bad for rates.
• Thursday August 20: Initial Jobless Claims expected down 3,000. This weekly report has remained high, it is not likely to move the market.
• Thursday: July Leading Indicators expected +0.6%. This is a very forward looking number forecasting 6 months in the future. It "sorta" fits the Fed's idea of the economy not showing any sustainable growth until the end of the 1st quarter 2010.... But a "good news" number can be bad news for interest rates, so there may be a bit of upward pressure on rates.
• Friday August 21: July Existing Home Sales expected up 2.5%. This is a good news number with a touch of bad. Distressed home sales but improved buyer sentiment and a stabilizing economy are the factors.  At these levels it is supportive of steady to potentially higher rates.
• Friday: Fed Chair Bernake is in Wyoming speaking at a Fed Conference. EF Hutton has NOTHING on the Chairman of the Federal Reserve. Whenever Bernake speaks the market listens intently. The market will look for any additional language (over and above last weeks post meeting statement) that will hint at how things will work as the stimulus spigot is turned off. The most likely scenario is that he will say nothing new and this will be a non event.

It is hard to pick a biggie of the week this week. If the numbers come in as forecast we may lose a little ground with out shedding any tears along the way... That leaves us with Stocks.  Overall stocks have been doing fairly well, and Earnings Reports that are just winding down have shown good numbers for most companies, BUT... the positive gains are mostly because of layoffs, and that is not sustainable growth for the rest of the year. If this is the way the markets see these reports we may see some profit taking in stocks that will lead to a flight ot quality into the credit markets which will drive prices up and the yield down.  That is more of a wild card scenario and I think it will be a quiet week over all.

Have a great week.

Rob

Robert Rauf

Mortgage Banker

www.RobertRaufHomeLoans.com   or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

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