“SLOW AND STEADY WINS THE RACE”, SAID THE TORTOISE TO THE HARE…yet it sure doesn’t make for very interesting news, does it? But in the wake of the blockbuster Jobs Report, Bonds moved slow and steady all last week, and allowed home loan rates to hold steady too. Although Bonds and home loan rates didn’t move much, there were a few interesting reports that may just give us some clues as to where rates might be headed for the week ahead. Let’s take a look…

Last Wednesday’s Balance of Trade, showing that the US Trade Deficit had the largest monthly decline since December 2001! This brought the deficit down to -$55 billion for the reporting period, the lowest reading taken since last September. The drop surprised economists, who were expecting the deficit to grow to a new record high…and in true pessimistic form, some economists actually put a “Negative Nellie” spin on this good news by declaring the pull back in the trade deficit really indicated consumer consumption is slowing.

But during April, consumers “consumed” like crazy…Retail Sales came in flaming hot at twice the gain expected by economists. This strong report underscored the growing strength of the economy, and may be reason to think that any recent weak reports were just a "soft patch" as Mr. Greenspan has suggested.

SO YOU THINK LIVING WILLS ARE JUST FOR THE ELDERLY? THINK AGAIN. DON’T MISS THIS WEEK’S IMPORTANT MORTGAGE MARKET VIEW.

Home loan rates have been relatively calm lately, but they may be gearing up to “bust a move”. Why?

For starters, this week brings an active economic calendar with several potentially market moving reports. Inflation is the arch-enemy of Bonds and home loan rates, and due up are both the Producer Price Index – measuring price inflation at the wholesale level – and the Consumer Price Index, measuring price inflation at the consumer level. If inflation appears to be in check, Mortgage Bond prices and home loan rates could improve. But if these reports indicate that inflation is on the rise, Mortgage Bond prices and home loan rates will worsen.

So remember the reports of late? The recent strong reports on Jobs and Retail Sales may just indicate that inflation is right around the corner.

And adding to the potential of a move are the technical signals. Check out the chart below, showing how Mortgage Bonds are being “squeezed” in a very tight range between their 25 and 100-day Moving Averages. Soon they’ll have to bust a move out one way or the other, and it is common to see prices move sharply one way or the other upon breaking out of such a tight range.

Bottom Line: Home loan rates may be on the move as important inflation reports and a pending technical breakout are on the way this week…and odds seem stronger that a move might be for the worse.

A serious topic that all too often, isn’t given serious enough attention until it’s too late…a Living Will. Everyone certainly remembers the recent story of Terri Schiavo, a 41-year-old Florida woman who suffered severe brain damage in 1990 after her heart stopped. She became the center of a national debate, as doctors said she was in a persistent vegetative state, and her husband, Michael Schiavo, says he once promised his wife he wouldn't keep her alive by artificial means. But her parents say that wouldn’t have been Terri’s wishes, and battled in court to keep their daughter alive.

Experts suggest that all adults – young or old – write out some form of advance directives, or include them as you create your regular will or estate plan.

Living Wills or advance directives not only protect your own wishes, but also protect your family from having to make difficult decisions during a time of extreme crisis. They also suggest that it is important to designate a power-of-attorney or representative who has similar views on end-of-life issues, understands your wishes very clearly, and can ensure they are followed as you intend. In the absence of clear directives and a representative person who understands, family members are forced to make difficult decisions, and will usually make decisions based on their own wishes and not necessarily the wishes of the incapacitated person.

Putting together a Living Will or advance directive doesn’t need to mean a lot of work or expense, and there are several different options. Here are a few resources:

This week’s calendar is action packed, bringing news on everything from manufacturing to housing to inflation. Of particular significance will be the inflation-measuring Producer Price Index (PPI) on Tuesday and the Consumer Price Index (CPI) on Wednesday.

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 May 16 – May 20