James Bowen

There will be no Friday or weekend rally today. Payrolls were down for the 8th straight month as unemployment jumped well more than expected now over 6% and at a new 5 year high.This confirms investors fears that there will be no late year recovery.Merrill Lynch has also been downgraded to "sell" as there are indications of new losses to go along with 5 plus billion in writedowns that they reported 2 months ago. Even oil's new low below $108/BL did nothing to stem the selling binge yesterday and today. Fresh news of record delinquency rates on mortgages has helped fuel the pessimism. Almost 10% of all American Homeowners with Mortgages are now at least 30 days behind on their payments.

After closing at 3.64% yesterday, the TNOTE yield is now moving in the 3.58% range. I believe it is safe to say that this weeks BOND rally could bring PAR rates on a fixed 30 year term back below 6% at some point in the day.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONAL BANK. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION

Aside from Walmart, which benefited from "going back to school" sales, all other retailers posted numbers much worse than expected. Applications for jobless benefits rose unexpectedly bucking the trend for a 4th straight weekly drop. Friday's overall unemployment release in now highly anticipated, but it really shouldn't show any surprises. News that the service sector grew for the first time in over 3 months and that OIL has dropped for the 5th day in a row did little to provide relief to the markets pessimism today.

Contrary to the doom and gloom existing today is that BONDS continue to strengthen and the BOND market is enjoying a 3 day rally. TNOTE yield is now hovering around 3.64%, a figure not seen for the past 5-6 months. It has continued to trend lower and this could mean a further rate reduction which may bring the 30 year term rate back below 6% by the morning.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONAL BANK. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION

The market is mixed today and even some pretty good market news is not creating positive sentiment and trading. Orders for manufactured goods were up in July but this has already been taken into consideration by investors. Numbers due out for auto sales and also expected negative results on payrolls which comes out Friday, will most likely keep investors skeptical.

Oil dropped again and is now below $108/Bl. We saw an upswing in prices in anticipation of Gustav and then a huge downward adjustment after the damage from the storm was much less significant than expected. This shows just how volatile this commodity still is. I expect that with the approach of Hannah, this same type of trading activity will occur. Ultimately, Global demand will continue to be the catalyst for OIL's pricing over the next several weeks.

The energy sector and tech sectors are down the most today, but surprisingly the financial sector is still holding it's own. This may be due in part to news that both purchase and refinance mortgage application volume is up. Mortgage rates continue to drop as BONDS strengthen. The 10 Year TNOTE yield moved backward to 3.71% down from yesterdays close of 3.74%. I expect this trend to continue this afternoon and if so, we may see a slight rate reduction to go along with yesterday's drop of almost .25 discount/basis point. We continue to inch closer to sub-6% fixed rates on a 30 year term.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONAL BANK. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION.

Gustav came in and didn't cause the damage expected. This had driven oil down to under 110/bl for the first time in many months. All commodities are down with the energy sector the largest loser. However, financials are helping the overall "green" market with Goldman Sachs re-rating B of A as a "buy". Lehman Bros is also in the news as a Korean managed array of Private investors has been looking into acquiring the firm sending a positive tone that Lehman's exposure may be covered.

Keeping the early gains tempered was news that the manufacturing sector showed a reduction in activity and spending which was almost double expectations. Housing activity was also down to the lowest level in 8 years. This bad news really didn't spark any big souring of the market and should not cause a change to overall sentiment of the day.

As a result of reduced long term inflation concerns, Bonds are strengthening. T- NOTE yield has been dropping all morning and now stands at around 3.77% after opening in the 3.84% range. If this holds, mortgage rates should improve this afternoon.

THIS IS MY OPINION ONLY AND NOT OF EAGLE NATIONAL BANK. ALWAYS CHECK WITH YOUR MORTGAGE PRODFESSIONAL REGARDING YOUR OWN TRANSACTION.

Today's news about July Income and Spending is out and the results suggest that the impact of the BIG STIMULUS package is drying up. Incomes fell by the most in almost 3 years and while spending was up, it was because of higher prices not more purchases. But, really who didn't see this coming after the Spring numbers. I don't think any of us thought that those numbers would continue. Numbers can be manipulated to show what ever is in need of being highlighted at the time. So when economic math wizards added all those checks into peoples incomes as a one time boost to reporting, it stands to reason that after those checks have come and gone that the numbers would look more reflective of reality. The question now is how does the market react to this news today and in the weeks to come.

Oil is driving up again after a drawback yesterday. Prices had been over 120/bl but dropped back under 116/bl last eve and now as GUSTAV comes closer and it's path more defined, there is an increase today.

The good news is that today is expected to show weak volume due to early close and HOLIDAY upcoming. Bond action will be light and early indications show some moderate bond improvement in early trading. Yesterday showed TNOTE yield movement up and down, but at the end of the day, it closed pretty much where it opened. Look to see if drops below 3.75% as that may trigger slightly better mortgage rates, if not today, then after the Holiday weekend.

THIS IS MY OPINION ONLY AND NOT THAT OF EAGLE NATIONWIDE MORTGAGE CO. OR EAGLE NATIONAL BANK. ALWAYS CHECK WITH YOUR MORTGAGE PROFESSIONAL REGARDING YOUR TRANSACTION