Mortgage Rates Look to Fall Further, August 25, 2010

Mortgage Rate Trend Direction:     Down

Economic Reports/Rate Impact:    Durable Goods Orders, 8:30 AM ET, Moderate Rate Impact

                                                              New Home Sales, 10:00 AM ET, Low Rate Impact

Key News:                                          Jackson Hole Economic Summit, Ireland Debt Rating Cut

Summary

On the heels of yesterday's strong drop in mortgage pricing brought about by a drop in the stock markets and rise in bond markets, today appears to offer a similar, yet less intensive opportunity for rate improvement.  Durable goods orders were reported prior to the market open today.  Shortly after the open, the new home sales figures for July will be released.  Also, commnentary from global central bankers and economists at the Jackson Hole Economic Summit along with reaction to the cut in Ireland's debt rating have the potential to move markets and mortgage rates today.  At this point in the day it appears that mortgage rates will begin the day lower from yesterday's close, but only slightly.

Impact of economic reports

Durable goods orders are an important guage of economic strength, and this morning's figures were not a positive sign.  New orders for items such as washing machines, refrigerators and the like, were much lower than forecasted.  When transportation items are taken out (cars, trucks, airplanes), the results were actually negative.  This has sent stocks lower in early trading.

At 10:00 AM ET we will see the new homes sales figures for July.  While there is no expectation for a big uptick in new home sales, traders will be focused on whether the market can hold its previous levels without dropping even further.

Impact of international or political events

Central bankers and economists from around the world are gathered in Jackson Hole, Wyoming for an economic summit this week.  With signs of an economic slowdown spreading across the globe, analysts and traders will be listening for new data and new strategies to try to stem the negative economic tide.

One item that is likely to be discussed is the decision to day by a major ratings agency to cut the credit rating on debt from Ireland.  The ratings were cut based on the cost to the Irish government of supporting domestic banks.  The strength of European banks continues to be in question, despite recent reports touting their strength.