“WHOEVER SAID MONEY CAN’T BUY HAPPINESS…DIDN’T KNOW WHERE TO GO SHOPPING.” Bo Derek
So are you planning on doing some holiday shopping of your own this week? If you are looking to purchase any imported goods, your dollar might go a bit further than it did just a week ago. Finally, the US Dollar has started to flex a little muscle. And how does this impact home loan rates? Even in light of Friday’s Producer Price Index showing some inflation, typically bad news for Bonds and home loan rates - Bonds shrugged it off and kept improving due to the very recent strength in the Dollar, which will bring the Bond market some shoppers of it’s own.

As the US Dollar begins to gain some traction against other major foreign currencies like the Euro and Yen, a strong Dollar will help attract more foreign interest in US Dollar denominated investments, such as Bonds. More foreign interest means more buyers, which will help keep Bond prices strong and home loan rates low. Although Bonds and home loan rates floated up and down slightly, overall the week ended with rates basically unchanged.

“CAN YOU HEAR ME NOW? YOU CAN? GOOD, BECAUSE YOU’VE BEEN PREAPPROVED FOR A TERRIFIC OFFER ON A LOW RATE CREDIT LINE…” WAIT JUST A MINUTE – TELEMARKETERS CAN’T CALL YOUR CELL PHONE…OR CAN THEY? DON’T MISS THIS WEEK’S MORTGAGE MARKET VIEW, AND LEARN HOW TO PROTECT YOURSELF FROM THIS LATEST INVASION."

So what’s on the plate for this coming week? In addition to watching the US Dollar movement, Traders will be on the edge of their seats waiting for Tuesday’s highly anticipated Federal Reserve Meeting. For the fifth time this year, Greenspan and the team are expected to raise short-term interest rates by a quarter percent. If this happens as expected, Mortgage Bond prices could potentially move higher, helping home loan rates to improve slightly.

A hike in the Fed Funds Rate is good for home loan rates. Why? Remember that home loan rates are based on Mortgage Bonds. A hike in the Fed Funds Rate not only quiets the fear of inflation, which erodes the value of Bonds, but the higher rate also helps to attract foreign investors to purchase US Bonds. On a global basis, money naturally seeks the highest rates of return at the lowest risk…and a hike in the offering rate would offer such an opportunity, provided the US Dollar continues to stabilize.

You are racing into the office to be on time for a meeting, and just as you hit the door, your cell phone starts ringing. You look down and wonder…what number is that? It’s a long distance number, but not one you recognize. This could be important. You stop to take the call. The next thing you hear is “Good morning, I wonder if I can take just a few minutes of your time to share some important new information about your credit card interest rate.” As you try to interrupt, the voice rambles on…“You have been chosen and approved for a low rate credit card at only 4.9% with transferred balances as low as 3.9% depending on the specifics of your approval level.” Whoa. Telephone solicitors calling your private cell phone number? You bet.

In a few weeks, cell phone numbers are being released to telemarketing companies…and you will start receiving sales calls. What to do?

From your cell phone, dial 888-382-1222, which is the National Do Not Call list. It takes all of about thirty seconds to register your number, and it will protect your cell phone number from solicitors for five years.

You probably already get enough calls on your cell phone, so why not take a minute to do this right now, and protect your cell number from unwanted callers.

The economic calendar heats up again this week with a number of potentially high impact reports. Of particular interest to Bonds is Tuesday’s Federal Open Market Committee Meeting, when the Fed is widely expected to raise short-term interest rates by another quarter of a percent. And as always, Greenspan’s commentary will be dissected carefully for any clues as to the Fed’s bias on economic conditions and future policy action.

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

For the week of December 13 – December 17