READY…SET…HIKE! Fed Day came and went without much fanfare. Chairman Greenspan and his inflation-fighting friends at the Fed decided to hike up the Fed Funds Rate by another .25%, although the decision was not unanimous. More importantly, the commentary was fairly tame with no shockers for the market to absorb. Greenspan said that although the aftermath of Hurricane Katrina will be highly costly and inflationary, the long-term look at the economy shows that inflation is still “contained”. Sounds like you can bank on a few more hikes before Uncle Al turns over the keys to his successor…likely to be Fed Governor Ben Bernanke.

Although Mortgage Bonds and home loan rates had a bit of improvement early in the week, Friday saw them worsen right back to where they started as China announced they would allow further floating of their currency, the Yuan, against the US Dollar.  Why?  A few months back, China announced that they would no longer peg the Yuan to the US Dollar, and would instead allow it to float within a “limited range”. The breaking news that China will allow the Yuan to float even further from the Dollar means that China does not have to purchase as many US denominated securities – like Bonds – to keep the US Dollar at higher levels, which would in turn keep the Chinese Yuan stronger. Less buying is always bad news for prices…so Bonds and home loan rates took a turn for the worse on the news.

AND SPEAKING OF TAKING A TURN FOR THE WORSE…WOULD YOU DREAM OF SERVING IMPORTANT DINNER GUESTS A WONDERFUL MEAL OF “SPAM”? OF COURSE NOT…SO WHY WOULD YOU TREAT YOUR FRIENDS AND FAMILY TO EMAIL “SPAM” ON A REGULAR BASIS? IT DOESN’T SMELL FUNNY…BUT IT COULD ACTUALLY HURT THEM. DON’T MISS THIS WEEK’S IMPORTANT MORTGAGE MARKET VIEW.

This week will be packed with news, including lots of information on a super hot topic – the housing market. Monday brings the Existing Home Sales Report, which includes data on housing inventory. This is critical in determining whether the housing market really is hot…or not. Inventory data takes a snapshot of all the homes currently for sale, and divides it by the current pace of homebuying. Last month’s reading was the best in 32 years, showing it would only take four months to completely deplete the current housing inventory. That’s no housing bubble! However, because this is a moving target, it’s wise to watch this indicator closely to gain clues on if the housing market will remain healthy – or begin to show some chinks in the armor.

Mortgage Bonds and home loan rates worsened slightly last week…and as the news of this week pours in, it will be important to see if the nearest floor of technical support will hold – or if home loan rates are headed for more difficult days ahead. The flavor of Monday’s news will likely set the direction of rates for the week.

“SO GOOD…IT’S GONE!”

And while that phrase refers to the famous canned meat, many people wish that when referring to email "SPAM", the old slogan would ring true and just be gone!

Annoying as it may be, we have all become accustomed to spam in our email accounts. And many times, the emails are from well-meaning friends, family members, or associates, containing an “important” message that the forwarding party thought we needed to know. After reading the message, the knee-jerk reaction is often to hit forward again, passing on what you think is relevant to all of the contacts in your address book. But all too often, the information being sent is truly spam – an Internet hoax, or worse yet, a scammer seeking private information.

One recent example is the often-forwarded “DO NOT CALL List for Cell Phone” email.

“Just a reminder...23 days from today, cell phone numbers are being released to telemarketing companies and you will start to receive sales calls. These telemarketers will eat up your free minutes and end up costing you money in the long run. To prevent this, call the following number from your cell phone…the National Cell Phone DO NOT CALL list. And be sure to pass this on to all your friends…”

Now after reading this, many individuals would forward this seemingly important email to their entire address book. But not so fast…before you blindly forward this one, you should know that although thousands believe otherwise, it is a complete hoax. The facts are that the Federal Trade Commission prohibits telemarketers from using automated dialers to call cell phone numbers. For more information on this particular hoax, visit: http://www.ftc.gov/opa/2005/04/dnc.htm.

Worse yet are the emails that are scammers seeking private information such as account numbers, passwords, and other important information. Forwarding these could actually cause big problems for friends and family members who might unknowingly act on the request.

So be cognizant of the emails you receive and forward – a few great sites for checking out the legitimacy of email and other legendary claims are www.snopes.com and www.truthorfiction.com. Take a minute before you blindly forward emails. You will not have bad luck if you “break the chain”…in fact - people will thank you!

This week's economic calendar picks up in both quantity and quality with 11 mid-level reports of mostly moderate market impact. Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of September 26 – September 30