Federal Reserve Chairman Ben Bernanke took to the pulpit Friday in Jackson Hole, but his remarks made little impact on mortgage bond trading. 

The Fed is aware of economic issues related to housing and mortgage debt, Bernanke said. 

He implied that the Fed wants more evidence that inflation has slowed before taking more drastic measures to help the economy, including reducing the Fed Funds Rate.

Friday morning, the Fed's preferred inflation gauge -- Personal Consumptions and Expenditure -- showed modest year-over-year growth of 1.9%, within the Fed's stated tolerance range.

In this holiday-shortened week, the big data point comes Friday in the form of the Non-Farm Payrolls report. 

August is expected to have added 120,000 jobs to the economy after last month's 92,000 increase.  The Unemployment Rate bears watching, too, however. 

The Christian Science Monitor estimates that 21,000 housing-related job cuts took place last month and layoffs may have also impacted other industries.  Job losses can impact the economy as much as job gains.

When Americans are working, they earn income.  When they earn income, they spend.  Of course, fewer workers means lower levels of consumer spending -- that can trigger an economic slowdown.

A slowly growing economy is generally good for mortgage rates because the dollar retains its value (i.e. no inflation).  Therefore, if the number of jobs created is lower than expected, or if the unemployment rate increases, mortgage rates should fall Friday because growth will be expected to slow.

(Image courtesy: Wall Street Journal Online)