Mortgage Rates Tumble, August 11, 2010

Mortgage Rate Trend Direction:     Down

Economic Reports/Impact:              Trade Balance, 8:30 AM ET, Low Rate Impact

Key News:                                            Reaction to Federal Reserve Statement

The much anticipated Federal Reserve Open Market Committee meeting and statement yesterday afternoon did not disappoint in terms of its impact on the market.  Reaction in the stock market (down) and the bond markets (up) was immediate with the statement's release.  Mortgage pricing improved yesterday afternoon and further improvements are expected today as analysts and traders accept the reality that our economy is in danger of reverting into recession.  Mortgage rates will drop at initial pricing this morning.

Impact of economic reports

The Trade Balance figures released this morning provide further evidence that the US economy is losing market share to other economies...China in particular.  The trend in our exports is down while imports are up.  This is not good for the health of US-based companies and could further hamper the job market.

Impact of international and political events

Markets around the world, excepting China are down in response to the actions yesterday of the US Central Bank.  A slowdown in Europe could be the result of the challenges faced in the US. 

In Washington, Congress is back in town to consider a stimulus bill largely made up of spending to support state's and local government hiring of teachers, firefighters and police officers.  Even if passed little stimulative effect is expected.