THE GOLD GOES TO...Mortgage Bonds and home loan rates, for having poured on the steam and sustaining strong levels not seen since the Spring! Mortgage Bonds have several positive factors at work now.

• Bonds have successfully tested and bounced off their 200-day Moving Average - this is a good floor of support.
• There should be an added "Flight to Quality" bid for bonds through the rest of the month, as the event risks of the Olympics and the Republican Convention take place.
• Inflation is nowhere to be found ? the latest CPI showed the first decline in prices since November 2003.
• Job creations have slowed significantly.

But of growing concern, are new record high prices in crude oil futures. Even Jed Clampett could not have predicted the virtual double in the price of oil during the past year. Traders are now talking about prices not only rising above $50 per barrel, but also moving toward a target of $60 per barrel. The concern is the economic recovery will be in danger of sputtering if oil prices reach $60 per barrel. Even worse, loan rates could be negatively affected because of inflation pressures...higher fuel will push costs to produce up, which will need to be passed on to consumers. So this is different from a normal slowdown, where rates would improve from weakness in the economy.

Overall, home loan rates were largely unchanged for the week.

DID YOU EVER WONDER WHY THE OIL-RICH CLAMPETT'S HUNG ONTO THAT OLD JALOPY? MAYBE THEY WERE JUST WAITING FOR THE RIGHT DEALER INCENTIVES. TODAY, CAR MAKERS ARE SCRAMBLING TO KEEP SALES BRISK AMIDST SOARING OIL PRICES. AND HAVE DEALS THAT EVEN MR. DRYSDALE WOULD LOVE. CHECK OUT THIS WEEKS MORTGAGE MARKET VIEW, FOR SOME TIPS ON HOW TO DEAL FOR A NEW VEHICLE LIKE AN INSIDER.

So when will Mortgage Bonds and home loan rates "bust a move"? Much like a rubber band will "snap" after being pulled tight, the recent lack of big motion in the Bond market may cause a pent-up state that can cause Bonds to "snap" more dramatically than expected when a move finally starts to take place. And take a look at the chart below?you can clearly see that Bonds are trading in a narrow channel between the 200-day Moving Average and overhead resistance at $101.43.

Since Bonds are trading at levels not seen since April, is it possible that home loan rates could get better yet? Let's take a look at what's in store that could cause Bonds to "snap" out of their current tight trading range. A loaded economic calendar is in store for the week, with the most important releases coming on Friday, by way of second quarter GDP and the Chain Deflator, the latter being Mr. Greenspan's favorite gauge on inflation.

Technically, the "line in the sand" for Mortgage Bonds lies at the 200-day Moving Average. Should Bond prices fall beneath this level based on super strong economic news, home loan rates will likely "snap" and move sharply higher?very quickly. But with the Republican National Convention starting in New York City next week, Mortgage Bonds will likely continue to enjoy a "flight to quality" bid.

Any geopolitical happenings and economic news will drive interest rate motion, but in the absence of shockers, home loan rates should continue to remain stable this week.

Happy New Year! Happy New School Year, that is?and as summer winds to an end, August also marks the end and beginning of a car's model year. This August also marks one of Detroit's most aggressive marketing campaigns, designed to entice you to act now if you're in the market to buy or lease a new vehicle.

In July, the Big 3 (General Motors, Ford and Chrysler) lost 3.9% of market share, falling below 60% of all cars and light trucks sold in the U.S. Ford and GM led the retreat with Chrysler bucking the trend of this group posting an increase in sales.

But no wonder domestic vehicle manufacturers are a little edgy these days. The price of oil continues to strike new highs, leaping over $48 a barrel last week, with even higher prices expected. Light trucks and SUV's account for 55% of all vehicles sold in the US, and domestic trucks account for an even higher percentage among the Big 3's total vehicle sales. More importantly, trucks are more profitable to the manufacturer than cars are?but cars cost much less at the gas station. So if dollar or fuel conscious buyers start looking at cars instead of trucks, manufacturer profits could tumble.

So what does all this mean to you? Where there is blood there is opportunity. GM and Ford have tossed caution to the wind?they are hungry and want you as a customer. Rebates on many 2004 vehicles are as high as $6,000 if you bring your own financing. Additionally, they are rolling out 0.0% financing and in some cases, even toss in extra cash rebates to further sweeten the pot. In addition to consumer rebates and financing incentives, manufacturers are also offering the dealers additional money to increase sales on many vehicles.

So now's a good time?but to get the best deal, it's always best to do your homework before you hit the showroom. If you know about dealer incentives, you may be able to negotiate for an even larger discount. For example, it may help your negotiating efforts to know that while your rebate is $750, the dealer is getting additional "marketing support" of $3,000! You can find out what the incentives are by visiting the manufacturer's website, but notice that incentives do vary depending on your location in the country.

In addition to manufacturers websites, take a look at the following to get a leg up on your local dealer. Look for the links that detail Current Offers, Rebates, Incentives, or Discount Offers.

Two final considerations. First, which is better, cash rebates or 0.0% financing? Do the math. Although 0.0% sound too good to pass up, in many cases, you will do better taking the rebate and financing the car on your own. Second, be sure to check with your accountant or CPA to see if your vehicle purchase may qualify for a tax break.

Another full week of economic reports lies ahead, and this week is another chance to check in on the current state of the housing market, with the Existing Home Sales report on Tuesday and the New Home Sales report on Wednesday. Forecasts call for July home sales to slip slightly lower from June's robust sales numbers.

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.