Mortgage Rates Continue Record Run, August 20, 2010

Mortgage Rate Trend Direction:     Neutral/Down

Economic Reports/Rate Impact:    No official economic reports released today

Key News                                            Global economic slowdown fears  

Summary

After yesterday's stock sell-off and rally in mortgage-backed securities (MBS), it would be reasonable to expect a reverse tred today.  However, from early market activity this morning it appears that yesterday's trend may continue...at least iniitially today.  Friday's tend to finish close to neutral in the markets in the absence of new information.  With no official economic reports released today, there is no reason to expect dramatic moves.  Consequently, mortgage rates are likely to begin the day neutral from yesterday's close with a bias toward some limited improvement.

Impact of economic reports

No official economic reports are due to be released today.  One unoffficial report may get some attention today.  Fidelity, the major mutual fund and retirement services firm released a report showing that a record number of their clients are tapping into their retirement funds.  This is strong anecdotal evidence that the down economy is taking a major toll on Americans.  Where in the past folks were tapping into their home equity, they are now tapping their retirement funds.  Let's hope this is a temporary phenomenon.

Impact of international or political events

Markets in Europe and Asia were down Friday based on fears that the gloabl economy is slowing.  The slowdown appears to be affecting all regions of the world. In China and other fast growing economies, a slowdown can probably be weathered with little difficulty.  However, in Europe and the US the fear is that the slowdown becomes a double-dip recession--one which may be difficult to get out of, with virtually no possibility of government stimulus.