Mortgage Rates: New Week, New Inspiration, August 30, 2010

Mortgage Rate Trend Direction:     Down

Economic Reports/Rate Impact:    Personal Spending/Income, 8:30 AM ET, Moderate Rate Impact

Key News:                                           National Association for Business Economics Survey

Summary

Following an injection of confidence last week from the comments of Federal Reserve Chairman Ben bernanke, the markets seek new inspiration today and this week.  Early activity suggests that new confidence is needed, with the stock market trading down.  The first opportunity for inspiration comes from the Personal Income/Spending report this morning.  With no other data today but much more this week, today could likely see markets respond to the limited data to provide direction, yet not move significantly. Mortgage rates are expected to open the day better today, yet to not move significantly. 

Impact of economic reports

The Personal Income/Spending report was relatively positive.  US consumers both made more and spent more in the 2nd quarter, giving some support to those who believe the economy will continue to grow. Nevertheless, after Friday's big stock market gains, there appears to be little support for a stock market rally today.

Tomorrow we get data on manufacturing activity, consumer confidence and, perhaps most importantly, the release of the minutes from the past Federal Open Market Commitee meeting. 

Impact of international or political events

An interesting survey was released by the National Association for Business Economics, a group of leading business economists in the US.  In the survey 60% NABE members indicated they believe the current policies of the Federal Reserve are "appropriate".  Perhaps the most dramatic (and negative) finding of the survey was that 81% of members do not believe that the bipartisan National Commission on Fiscal Responsibility and Reform will be able to come up with policies that will be effective in addressing many of our long term financial issues. 

Progress on these longstanding financial issues (deficit reduction, Social Security, etc.) is essential before any sustained economic recovery can be expected.