“INFLATION…THAT’S WHEN YOU PAY FIFTEEN DOLLARS FOR THE TEN-DOLLAR HAIRCUT YOU USED TO GET FOR FIVE DOLLARS WHEN YOU HAD HAIR.” (Sam Ewing) But based on the reports of last week, some of the worry about inflation has gotten a little trim as well. The Consumer Price Index report – a top indicator of retail inflation – came in below expectations on Tuesday. More soft news when the Philadelphia Fed Manufacturing Index came in super weak, much lower than expected on Thursday. While Bond prices had a small lift on these soggy reports, they gave back all their gains on Friday afternoon as profit takers and traders positioned in front of the big Fed announcement coming this Tuesday. Overall, home loan rates remained largely unchanged for the week.

So Chairman Greenspan has held onto his statement that the recent economic weakness is just a “soft patch” in the middle of the recovery…but is this “soft patch” starting to look more like a ditch? This past spring, the economy appeared to be on fire, with the majority of economic reports coming out blazing, showing strong growth in all areas including jobs. But now the growth seems to have cooled for an extended period of time. So what is Mr. Greenspan going to say now? Will he stick to his guns…or pull back and show some concern? The traders are predicting a 96% chance of a .25% hike to the Fed Funds Rate, but Bonds and home loan rates will likely react to Greenspan’s comments. If Big Al and friends hike rates and say that inflation is mild, but growth is expected, Bonds and home loan rates should react favorably. But if his comments contain inflationary concerns, Bond traders are not going to like that at all, and home loan rates should move higher. Now, what if the Fed pulls a shocker and does not raise rates at all? This would indicate some serious worries about the economic recovery…that the Fed would actually risk inflation to spur economic growth. Although Bonds and home loan rates generally tend to like bad economic news, the dislike of inflation would override, and Bonds could drop sharply lower with home loan rates moving higher.

NEXT TIME YOU ARE TROLLING THROUGH YOUR EMAIL – DON’T GET CAUGHT BY “PHISHERS”…THE LATEST SCAM THAT THE FBI IS CALLING THE HOTTEST AND MOST TROUBLING NEW SCAM ON THE INTERNET. CHECK OUT THIS WEEKS MORTGAGE MARKET VIEW TO LEARN HOW TO AVOID GETTING HOOKED.

Now as traders and investors are watching and waiting for Tuesday’s Fed decision and commentary, Bonds are eyeing some interesting technical pressures ahead as well. Remember that Bond prices tend to bump between “floors” of support and “ceilings” of resistance, and it usually takes some strong market action to cause a “breakout” through either support or resistance. Now take a peek at the chart below, where you can clearly see the floor of support at the 25-day Moving Average rising higher, while the ceiling of resistance lies in wait overhead. Bonds will soon be caught in a tight squeeze between these levels, with no choice but to make a break higher or lower. And with all the sideways motion of late, Bonds are itching to bust a strong move. What will happen? More than likely, it will rest upon the Fed’s action and commentary, so the market will be hanging on Greenspan’s every syllable this Tuesday afternoon.

Bottom Line: Mr. Greenspan and friends are holding all the cards this week, and home loan rate movement will depend on the decision and comments released on Tuesday afternoon.

Internet scammers are “phishing” for information…but don’t take the bait!

”Phishing” is the term being used to describe a whole new type of identity theft…where scammers imitate legitimate companies in e-mails to entice people to share user names, passwords, account information or credit-card numbers. The term Phishing comes from the fact that Internet scammers are using increasingly sophisticated lures as they "fish" for users' private information. The most common ploy is to copy the look and feel of a web page from a major company, and then use that design to set up a nearly identical page or email communication in order to deceive consumers.

The typical Phishing scam goes something like this. You receive an e-mail, supposedly from a company or financial institution you may do business with or even from a government agency such as the FDIC. The e-mail states that your account information has been lost or stolen, and requests that you verify or re-submit confidential information, such as bank account and credit card numbers, social security numbers, passwords or PIN numbers. The information is to be provided via a return e-mail, a form on a linked website, or a pop-up box…all with the name, look and logo of the company or government agency.

While your monetary losses are generally limited due to federal and state laws, if a thief uses your name to commit fraud you are likely to spend a great deal of time, money and frustration correcting your credit files or otherwise defending yourself.

Never provide personal information in response to an unsolicited call, fax, letter, e-mail or Internet advertisement.

Report any suspicious e-mail requests to the real bank, company or government agency, and be sure to use a phone number or e-mail address from a reliable source, not from the email you were sent. You can also file complaints and learn more at the Internet Crime Complaint Center (www.ifccfbi.gov) or at the Federal Trade Commission site (www.ftc.gov).

The Economic Report calendar for this week is somewhat quiet, but the high-impact Federal Open Market Committee meeting is scheduled for this Tuesday. The Fed will announce its decision about interest-rate changes on at 2:15 pm ET, and the market is expecting a .25% increase in the Fed Funds Rate.

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