Morning Economic News - October 30, 2008

We may get a few more hours out of the rally on Wall Street Thursday, despite expected bad news in the GDP report. In overnight trading oil prices are up more than 4%, the Nikkei average is up more than 9%, Australia's S&P/ASX 200 is up more than 4% and US stock market futures are up about 3.5% [2:30 AM Eastern]. The dollar is down against all the major currencies except the yen, reversing the trend we've seen on the worst days of the financial panic.

Federal Funds Rate (FOMC) - October 29, 2008

Federal Funds Rate: 1%

Discount Rate: 1.25%

Weekly Mortgage Applications Survey - October 29, 2008

• Market Composite Index: 476.7


• Change: Up 16.8%


• Purchase Index: 303.1


• Change: Up 8.5%

Durable Goods Orders - September 2008

New Orders Change: Up 0.8%
Nondefense Capital Goods Change: Up 0.8%

Gas prices below year ago levels nationwide

Today's This Week in Petroleum from the Energy Information
Administration reported that gasoline prices are now lower than year
ago levels in all US regions. After six consecutive weeks of declines,
prices have fallen nearly 31% to a national average of $2.656 per
gallon. (Locally, gas prices have been under $2/gallon in southwest
Missouri for the last 5 days.) Gas prices may stabilize at this level
as gasoline inventories fell slightly and are again slightly below the
average range for the season when measured in barrels (but within the
average range in days of supply).

Housing market hits the trifecta

This is what we’ve been waiting several months for - real estate
markets hit the trifecta the last four days, with existing home sales,
new home sales and mortgage applications all increasing.

Australian economic growth continued in August

Australian economic indicators continued their July rebound
in August, with coincident indicators rising 0.1% and leading
indicators up 0.4%. This was the sixth consecutive month of increases
in the leading index and the strength was widespread among the various
indicators.

Fed Steps Up Assault on Slump

The Fed cut its benchmark rate by a half-point to 1%, the
lowest level since 2003-04 and a move accompanied by two other central
banks. Markets signaled that investors were continuing to shed the
caution of recent weeks.

Durable-Goods Orders Increase

Demand for expensive goods climbed 0.8% in September,
boosted by higher car and airplane orders for an unexpected increase
amid a weakening economy and a credit crunch.

Bernanke Signals Door `Open' for Cutting Rates to Lowest Level on Record Federal Reserve Chairman Ben S.
Bernanke signaled he's ready to cut interest rates to the lowest
level on record should the central bank's actions fail to stem
the deepening economic slump.

Taiwan Cuts Key Rate to 3% From 3.25%, Following Reductions by U.S., China Taiwan's central bank cut interest
rates for the third time in less than two months, after
counterparts in the U.S. and China lowered borrowing costs to
stem the damage from the global financial crisis.

U.S. Economy Likely Shrank in Quarter as Voters Turned Against Republicans The U.S. economy probably shrank in
the third quarter by the most since the 2001 recession just as
Americans were deciding how to cast their ballots in the Nov. 4
elections.

Bank of Japan May Be Obliged to Lower Rates After Investors Anticipate Cut The Bank of Japan may have little
choice but to cut interest rates tomorrow after a newspaper
report raised investors' expectations that it would.

Fed Offers $120 Billion to Emerging-Market Central Banks as Crisis Spreads The Federal Reserve agreed to provide
$30 billion each to the central banks of Brazil, Mexico, South
Korea and Singapore, expanding its effort to unfreeze money
markets to emerging nations for the first time.

China May Reduce Rates Again as Global Slump Hurts Exports, Manufacturing China may keep lowering interest
rates after three reductions in two months as the global
financial crisis drags down exports and production.

Asia markets signal tentative return of risk taking

BEIJING
(Reuters) - Asian share markets rallied and the euro surged on Thursday
on tentative signs that investors are rediscovering an appetite for
risk in response to global efforts to prevent the financial crisis from
leading to a deep recession.

ECB to cut rates, but by how much?

Economists
are now certain the European Central Bank will cut interest rates again
at its next meeting, the only question is how much. ECB chief
Jean-Claude Trichet's blunt hint that..