Mortgage Rates Anticipate Fed, August 10, 2010

Mortgage Rate Trend Direction:     Neutral/Down

Economic Reports/Impact:             Productivity, 8:30 AM ET, Low Rate Impact

                                                              Wholesale Trade, 10:00 AM ET, Moderate Rate Impact

Key News:                                           Federal Reserve FOMC Meeting/Statement, 2:15 PM ET

After much debate in the financial media regarding the likely action from the Federal Reserve's FOMC, the day has finally arrived to find out how the US central bank will respond to a slowing economy and fears of deflation.  Before the FOMC statement is release two other reports will provide additional information to consider.  Productivity (how much companies produce given a certain amount of resources) and Wholesale Trade reports are not expected to move the markets today.  Consequently, based on early pre-market activity stocks are expected to fall at the opening of trading today while mortgage rates are likely going to open neutral to slightly lower.

Impact of economic reports

Neither the Productivity report nor the Wholesale Trade figures released this morning are likely to have a great deal of impact.   Productivity is expected to decline from its lofty growth rates in recent months while Wholesale Trade (trade from business to business) is expected to reflect the overall slowing seen throughout the economy.

Impact of international or political events

All analysts and traders are awaiting the Fed decision this afternoon since it is likely to provide direction to the markets for months to come.  Regardless of what decision the Fed makes some observers will be disappointed today.  Consequently, unless the Fed signals a bold change in direction, mortgage rates will likely continue to hover at their record or near-record lows.