Mortgage Rates Start Week Quietly, August 23, 2010

Mortgage Rate Trend Direction:     Neutral

Economic Reports/Rate Impact:    No economic reports released today

Key News:                                           M&A Activity

Summary

A quiet day appears to be on hand as many market participants are taking squeezing in some final vactation days before school begins and the Fall trading season commences.  With no official economic data released today and a great deal of information coming tomorrow through Friday, today will not likely provide a great deal of movement in any of the markets.  Therefore, mortgage rates are expected to open neutral this morning relative to Friday's closing positions.

Impact of economic reports

While there will not be any reports today, traders may begin to act based on expectations for the data that will be coming this week.  Tomorrow and Wednesday housing data will be released that is likely to show on-going struggles in this important sector. 

The expected bright spot of the week could be Wednesday's Durable Goods Orders report that should show a strong increase.  Thursday's Jobless Claims report is expected to show similar results to last week, which surprised to the high side.  Friday brings us the Preliminary GDP (Gross Domestic Product) report that will likely cut estimates almost in half for the total output of the US economy during the 2nd quarter.

Impact of international and political events

Mergers and aquisitions activity is increasing as evidenced by two potential deals.  First, Hewlett Packard has topped Dell's bid for digital storage company 3Par.  Second, minining company Potash has officially rejected a bid from larger rival BHP-Billiton, saying higher offers are expected.  Analysts view these types of deals as evidence that companies with a great deal of cash on their books are interested in growing market share through acquisitions rather than through internal growth.  While this can be positive for stocks, it typically is not helpful, at least initially, to the jobs market.