lower rates this week?

Last week, as predicted rates improved early in the week, then gave back almost all of the gains as rumors ran amuck that Korea Development Bank may be interested in acquiring Lehman Brothers. This caused many investors to pull money out of bonds in favor of stocks thereby surrendering most of the lower rates initially gained during the beginning of the week.

The week ahead features the key report for the housing industry, namely Existing Home Sales, which is due out on Monday. In addition, the FOMC will be releasing the meeting minutes on Tuesday. Investors are sure to read between the lines of this key report for any clues of when and if the Fed will adjust rates.

Last but not least, the Personal Consumption Expenditures (PCE) report will be released on Friday and will give a read of inflation before the market closes early in observance of Labor Day. Remember, the PCE report is the Fed's favorite gauge of inflation and thus carries tremendous weight in most investors eyes. Add this that most of the senior investors and traders traditionally start their holiday festivities early, the low volume and junior traders left in charge can push the market drastically with just a few trades, it is possible that Friday's movements may be over stated.

The bottom line: It is likely that the market will continue to be volatile.