Mortgage Rates Run for the History Books, August 24, 2010

Mortgage Rate Trend Direction: Down

Economic Reports/Rate Impact: Existing Home Sales, 10:00 AM ET, Moderate Rate Impact

Key News: US Political Primaries

Summary

Mortgage Rates are poised this morning to make a run toward the history books as the stock market appears ready for a major sell-off. Bonds and mortgage-backed securities are trading sharply higher in early trading. With only one economic report released today and one auction of US Treasuries, the early momentum may be able to carry the day. A surprise better number from existing housing sales could curtail this expected result.

Impact of economic reports

Existing home sales are expected to be down sharply when the monthly report by the National Association of Realtors is issued at 10:00 AM. Preliminary reports have shown a slowdown in purchases and an increase in supply brought about by an acceleration in foreclosure activity. One analyst this week stated that he believed the housing market had already entered a "double-dip" recession.

Impact of international or political events

In what is part of a bigger, longer-term story primaries in Republican US Senatorial races in Arizona, Alaska and Florida. Clearly, the Arizona race has been the most highly watched as it pits long-term Senator and two-time presidential candidate John McCain against former six-term Congressman J.D. Hayworth. For a while, earlier in the year, it appeared that Senator McCain's run would end after 24 years, yet a huge injection of left-over cash from the McCain presidential campaign and new aggressive rhetoric on the economy and immigration appear to have turned the tide in favor of the incumbant. Now the question becomes, will the minority party capture enough new seats in the November general election to become the majority in one or both houses of Congress? The ultimate electoral outcome of the November elections will impact the US economy and mortgage rates for years to come.