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Mortgage Forecast for the week of August 6th, 2007.

Whew…after a busy week of expected and unexpected news last week, the economic report calendar becomes very tame this coming week, only populated with a handful of low-level reports. In fact, the week’s only major event takes place on Tuesday with the release of the Fed’s latest interest rate decision and monetary Policy Statement. The Fed is expected once more to keep their Fed Funds interest rate “on hold” at 5.25%.

But what will be of particular interest is the tone and wording of the Fed’s Policy Statement. Are they feeling more comfortable about inflation, given the inflation friendly news of last week? If this sentiment leaks into the verbiage of the Policy Statement, Bonds may get a ride higher upon the release, and home loan rates would improve. However, if Fed Chair Ben Bernanke and his fellow inflation fighters at the Fed still sound concerned about inflation, Bonds and home loan rates could worsen.

Chart: Fannie Mae 6.0%% Mortgage Bond (Friday Aug 03, 2007)

Kevin Martini
4509 Creedmoor Road
Suite 300
Raleigh, NC 27612

Posted by Kevin Martini