In a week in which stock markets moved 1 percent or more on four separate days, mortgage markets displayed a relative calmness that helped pull rates lower.

It was the second consecutive week that mortgage rates improved in Cincinnati. 

Last week’s biggest story came Monday when the housing bill was passed into law.  The new law provides lifelines to the housing market’s far-reaching corners including to homeowners, to lenders, and to mortgage-bond securitizers like Fannie Mae.

To the mortgage markets, the law adds stability to the system.  Because the severity of losses is likely to reduce, mortgage debt is suddenly more attractive to global investors which includes pension funds, hedge funds, and other nations. 

With fewer mortgage-related losses expected, demand for mortgage debt increased and that helped pressure mortgage rates lower.

There was other big news last week, too, and it came in the form of employment data. 

For the seventh straight month, the economy lost jobs and it has now shed close to a half-million jobs so far this year — a minuscule one-third-of-one-percent of the entire U.S. workforce.

Despite that smallness, though, unemployment among Americans is a trend worth watching. 

When fewer Americans are working, fewer Americans are spending and that can slow down the U.S. economy.  For now, this sort of mild slowdown appears to be leading mortgage rates lower but too many lost jobs could reverse the trend.

This week, there are two big events on the calendar — Monday’s Personal Spending and Personal Income figures, and Tuesday’s Federal Open Market Committee meeting.

The Fed is widely expected to hold the Federal Funds Rate at 2.000 percent but — as is always the case — it’s not what the Fed does, it’s what the Fed says.  If the Fed talks tough against inflation, expect mortgage rates to rise.

(Images courtesy: The Wall Street Journal Online)