Friday's bond market has opened down slightly following the release of this morning's economic news that had mixed results but leaned more towards unfavorable to bonds. The stock markets are also in negative ground with the Dow down 74 points and the Nasdaq down 30 points. The bond market is currently down 3/32, which will likely have little impact on this morning's mortgage rates. However, if bonds fall any further we likely will see mortgage rates revise higher later today.

The Labor Department gave us this morning's big news with the release of July's Employment figures. They said that the unemployment rate moved higher by 0.2% to a four year high of 5.7%. Analysts were expecting an increase but only to 5.6%. This was the part of the report that was favorable to bonds.

The negative portion came in the number of payrolls added or lost during the month. Analysts were expecting to see a loss of 75,000 jobs last month, but today's report showe d a loss of 51,000 payrolls. It also revised June's loss upward by 11,000 jobs. However, this was the seventh consecutive monthly decline in payrolls, which indicates that the employment sector remains soft. Generally speaking, that is good news for bonds even though its not as good as we had hoped for.

Today's second release was the Institute for Supply Management's (ISM) Manufacturing Index for July. It showed a stronger than expected reading of 50.0. Analysts were expecting to see a larger decline to a reading of 49.2. This means that more surveyed manufacturers felt business had improved during the month than was expected. That is also considered to be a negative for bonds, but was not enough to create much concern in the market.

Next week brings us a handful of relevant economic reports for the markets to digest, beginning with July's Personal Income and Outlays early Monday morning. This report is considered to be moderate-to-high in import ance and can influence bond trading and mortgage rates. However, I would not expect to see a significant move in rates solely as a result of this report.

The rest of the week includes data on manufacturing and worker productivity along with another Federal Open Market Committee (FOMC) meeting. Look for more details on this meeting and next week's events in Sunday's weekly preview.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2008 gail@viphousesearch.com www.viphousesearch.com

This week brings us the release of only three pieces of economic data that are likely to affect mortgage rates. However, the biggest event of the week will be the Federal Open Market Committee (FOMC) meeting Tuesday. We may see some pressure in bonds tomorrow as investors prepare for the meeting, but most traders will likely make their moves post-meeting Tuesday.

The first important release is June's Personal Income and Outlays data tomorrow morning. The Income & Spending report helps us measure consumer ability to spend and current spending habits. If it shows sizable increases, bond selling could lead to higher mortgage rates. Current forecasts are calling for a decline of 0.1% in income and an increase of 0.5% in spending.

Also scheduled for release tomorrow is June's Factory Orders data. This report helps us measure manufacturing sector strength by tracking orders for both durable and non-durable goods during the month of June. It is similar to last week's Durable Goods Orders report that tracks only orders for big-ticket items. Since a significant portion of the data was released last week, this report may not have as big of an impact on the markets as you may think. Analysts' are expecting to see an increase of approximately 0.7% in new orders.





The FOMC meeting will adjourn at 2:15 PM Tuesday. It is expected to yield no change to key interest rates. Usually, the post-meeting comments seem to have more of an influence on the markets than the rate adjustments themselves, or a lack of one in many cases. Look for the statement to lead to volatility during afternoon trading if it hints at what the Fed's next move may be.

Bond traders will be watching the post meeting statement very carefully. Generally speaking, a hint of rate hikes in the future will be construed as an indication that inflation is still a concern and would likely lead to bond selling and increases to mortga ge rates. If the statement gives an indication that the Fed is not as concerned with inflation as previously noted, the bond market should rally, leading to lower mortgage rates.





Employee Productivity and Costs data for the second quarter will be released Friday morning. It will give us an indication of employee output. High levels of productivity are believed to allow the economy to grow without fears of inflation. I don't see this being a big mover of mortgage pricing, but since it is the only data of the day it may influence rates slightly. Analysts are currently expecting to see an increase in productivity of 2.7%. A higher than expected reading could help improve bonds, leading to lower mortgage rates.

Also worth noting are two important Treasury auctions this week. The sale of 10-year Notes will be held Wednesday while 30-year Bonds will be sold Thursday. We often see some weakness in bonds ahead of the sales as the firms pa rticipating prepare for them. However, as long as they are met with decent demand from investors, the firms usually buy them back. This tends to help recover any presale losses. But, if the sales are met with a lackluster interest from investors- particularly international buyers, the bond market may move lower after the results are posted. Those results will be announced at 1:00 PM each sale day. If there will be revisions to mortgage rates because of the results, look for them to be made during afternoon trading Wednesday and/or Thursday.

Overall, I am expecting to see a choppy week in trading and mortgage rates. We will likely see the most movement in rates Tuesday with the FOMC meeting. Wednesday's Treasury auction may also affect rates during afternoon trading. I suspect that the rest of the week will be driven by stock market gains or losses.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2008 ____________________________________________________   Bank Owned Properties (REO) Today, Monday August 4, 2008, there are over 70 Bank Owned homes on the market in Mission Viejo ranging in price from $164,900 to $819,800. For a list of these homes in Mission Viejo or a list of Bank Owned homes in any other city contact Gail McClendon 949 422-4343 or gail@viphousesearch.com Visit my website at www.viphousesearch.com