More positive economic signals and moves today that it's looking to be a great start to 2008 for homebuyers.

The bond and mortgage markets started quietly today as total attention is directed to tomorrow's FOMC meeting and how big a cut they do. Renewed turbulence in financial markets puts Bernanke under pressure to open the monetary spigots wider to pump up the economy. Traders in federal funds futures are betting it's a certainty the Fed will cut its benchmark interest rate from 4.5% tomorrow, and they see a better-than-ever chance the rate will be 3.75% or below by April. Futures on the Chicago Board of Trade show a 74% chance the Fed will trim its target for overnight loans between banks by a quarter percentage point to 4.25% tomorrow. The rest of the bets are for a half-point reduction. The collapse of the U.S. subprime market has led to about $76B of losses and markdowns at securities firms and banks this year, prompting the Federal Reserve to reduce borrowing costs twice since Sept. 18.

Oct pending home sales were reported at 10:00 by NAR. Sales increased +0.6%, the second increase in succession; but sales are off 18.4% yr/yr. In 2007 sales off 12.5%; in 2008 sales are expected to be up 0.5% (frm 2007) according to their outlook.

Last week Fannie issued an announcement of new fees to be charged for various credit scores that will add a lot of cost to consumers; now this just in: Fannie Mae is implementing a new upfront charge of 0.25% that will apply to all: (1) whole loan mortgages purchased on or after March 1, 2008; or, (2) mortgage loans delivered into MBS with issue dates on or after March 1, 2008. The costs of securing a mortgage is increasing as everyone is trying to make a buck to offset previous losses.

This week's economic releases and estimates: Tuesday, Oct wholesale inventories (+0.5%). Wednesday: Oct trade deficit (-$57.0B); Nov Treasury Budget (-$90.0B). Thursday: Nov retail sales (+0.6%; ex autos +0.6%); Nov PPI (+1.5%, ex food and energy +0.2%); weekly jobless claims (-3K to 335K); Oct business inventories (+0.3%). Friday: Nov CPI (+0.6%, ex food and energy (+0.2%); Nov industrial production (+0.1%), Nov factory usage (81.7% unch frm Oct). After the FOMC statement tomorrow the focus this week will be on inflation data.