"HOW MANY A MAN HAS THROWN UP HIS HANDS AT A TIME WHEN A LITTLE MORE PATIENCE WOULD HAVE ACHIEVED SUCCESS." Elbert Hubbard So is patience a virtue? The Fed seems to think so, as they decided last week to hold the Fed Funds Rate steady at 5.25%. Now hiking rates helps control inflation, and the Fed wants inflation inside their target range of 1-2%...but it's lately been measured between 2.5 - 3.0%.

So what's the Fed up to? Here is the key - Tolerance vs. Patience. The Fed will not tolerate inflation above 2%...even at the expense of the economy. However, they are trying to exercise patience, as they know that it takes time for the impact of their past rate hikes to filter through the economy and fight inflation, normally between 6-9 months. So the Fed has been patient since their last hike on June 29th, waiting for inflation to decline...but inflation has been stubbornly persistent, and the patience is wearing thin on some Fed members.

The Fed's favorite measure of inflation, the Personal Consumption Expenditure Index, hits first thing Monday, and will take special significance following this week's action. If inflation does not begin to move lower towards the Fed's target, expect more hikes. But this week's tame talk on the prospects of lower inflation and slower economic growth ahead gave Bonds a boost higher, and home loan rates were unchanged to improved by .125%.

RESERVATIONS MADE AND BAGS PACKED - YOU'RE READY FOR THAT HOLIDAY VACATION. BUT HOLD ON! IF YOU ARE USING A BIRTH CERTIFICATE FOR YOUR ID OUTSIDE THE US, YOUR VACATION COULD TURN INTO A NIGHTMARE, THANKS TO A NEW LAW ABOUT TO TAKE EFFECT. DON'T MISS THIS WEEK'S MORTGAGE MARKET VIEW TO PROTECT YOUR FAMILY AND FRIENDS.

So we should get some good insight on the health of the economy and the pace of inflation this week...also meaning there is a good chance of added market volatility in both Stocks and Bonds.

The Fed's patience may be tested early on, as their favorite measure of inflation will hit the wires on Monday - the Personal Consumption Expenditure (PCE) Index - and it may very well influence the next Fed Funds Rate decision. Will it show inflation remaining stubbornly persistent? The Fed won't tolerate it, and may have to hike rates at its next meeting. But if the PCE shows inflation ticking down towards the Fed's desired target, the current cycle of hikes may finally be over. That could help improve home loan rates, and add some punch to an already hot stock market.

Speaking of a hot stock market - have you checked your portfolio value lately? You might just be pleasantly surprised...Stocks, as measured by the S&P 500 are up 13% since mid-July.

GOT PASSPORT?

As the holiday season approaches - the vacation season approaches as well. And if you haven't yet gotten a passport for yourself or your family members - better act now.

While a birth certificate used to do the trick for traveling out of the country, effective January 8, 2007, all US citizens leaving the country and traveling by air will be required to present a valid passport. Yep, even the kids. Why? Better security and safety. Passports are much more uniform than birth certificates, making it much easier for border and security officials to detect any forgery, and help prevent unauthorized entry into the US.

The processing of a passport can take several weeks - so even if you don't have a trip immediately planned, get started now. Here are a few helpful links:

If you are applying for a passport for the first time, simply hit this link - First Time Passport Help - for instructions on how and where to obtain a passport, and to download the required forms to save time. When applying for the first time, you must apply in person at one of the 7,000 passport acceptance facilities.

If you need to renew a passport, the renewal can be done by mail, simply hit this link - Passport Renewal Help - to download the required forms.

As always, feel free to pass this on to your friends, family members and coworkers - they'll thank you when they can get back into the country after their holiday vacation...

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of October 30 – November 03