MARKET NEWS

Tuesday's bond market has opened in positive ground due to early selling in stocks. The major stock indexes are showing significant losses during early trading that has the Dow down 182 points and the Nasdaq down 27 points. The bond market is currently up 11/32, which should improve this morning's mortgage rates by approximately .125 - .250 of a discount point over yesterday's early pricing.

There was nothing of importance released this morning in terms of economic data. However, weak corporate earnings and credit downgrades in Spain have stock traders selling holdings in fear of slower than though economic growth on the global level. As investors sell stock holdings, it is common to see those funds moved into bonds as a safe haven from the volatility. Unfortunately, if the crisis that is fueling the stock selling is only temporary, those gains in bonds that came as a result could be short-lived as once the volatility in stocks subsides, those funds are moved back into stocks. On the other hand, if the problem persists, this could be the beginning of a downward move in mortgage rates as more and more funds are moved into bonds.

There is some economic data scheduled for release tomorrow morning. September's New Home Sales report will be posted at 10:00 AM ET tomorrow, giving us another measurement of housing sector strength. This data covers the small percentage of home sales that last week's Existing Home Sales report didn't include and is this week's least important data. It is expected to show an increase in sales of newly constructed homes, but regardless of its results I am not expecting it to have a significant impact on mortgage rates tomorrow.

Also tomorrow is the adjournment of this week's FOMC meeting that began today. There really is no possibility of the Fed changing key short-term interest rates at this meeting. But market participants will be looking at the post-meeting statement for any indication of change in Fed sentiment or possibly further development on recent talk of them issuing certain targets in particular economic readings that would trigger an automatic increase in key short-term interest rates. This would eliminate most of the guessing in the markets of what it will take for the Fed to start raising those rates. The meeting will adjourn at 2:150 PM ET tomorrow, so look for any reaction to the statement to come during afternoon hours.