Mortgage Rates Play Waiting Game, August 4, 2010

Mortgage Rate Trend Direction: Neutral

Economic Reports/Impact:          ISM Services Index, 10:00 AM ET, Moderate Rate Impact

Key News:                                       Congressional decision on tax cuts

We have reached that point in the week where all eyes are turned toward Friday's Job's Report.  Consequently, with little data or news on the table this morning, markets and mortgage rates are likely not going to move dramatically in either direction. At initial pricing from lenders this morning, mortgage rates are likely to be neutral relative to their closing price yesterday afternoon.

Impact of economic reports

Only one official economic report is scheduled for release today: the ISM Services Index.  This report measures the services sector activity.  Expectations are for a slight decline in activity in this sector.  Two unofficial reports were released this morning and did give the markets a slight boost.  ADP and Challenger, Gray and Christmas, two employment services firms released reports on employment and planned layoffs respectively.  For the sixth consecutive month, the ADP report showed job gains in private employment, though quite modest.  The Challenger report showed that planned layoff's increased but at a slower pace than during 2009.

Impact of international or political events

Continuing discussion is taking place in Congress and within the Obama administration regarding the impact of extending the tax cuts enacted during the previous administration.  Without any action by Congress these tax cuts will expire in January.  Some believe that failing to extend the tax cuts would create a further hurdle for an already weak economy.