Today, Hurricane Paul is weakening to a Category 1 Hurricane as it dies a slow death off the coast of Texas.  Mortgage rates are moving higher in response.

See, after last year's record Hurricane Season, the activists were screaming about Global Warming and predicted that this season's hurricanes would be just as bad.  Still smarting from the oil supply issues post-Katrina and others, markets did not want to be burned again.

So, heading into Hurricane Season 2006, oil prices rose from $57 to $75 per barrel.  Prices held in that range until the start of September when it became apparent that the oil supply would be plentiful. 

No hurricanes reached U.S. soil and that forced markets to change their expectation of where oil prices should be.  That began the tumble to today's $58 levels, giving consumers a boost in the wallet. 

That newfound "wealth" is finding its way back into the economy.  Retail sales are humming and the new expectation is that this will be a record-breaking Christmas as the registers.

If there was ever a reason to hate Elmo TMX (more), it's that you want the spending to stop, inflation to remain contained, and mortgage rates to stay low.

As we mark the one-year anniversary of Hurricane Katrina, Tropical Storm 5 (Ernesto) is battering Grenada and its neighbors.

Should this storm strengthen and reach the Gulf of Mexico, it will be the first named storm in that region since last Fall.

It's too soon to sell if the storm will cause damage to oil pipelines, but oil prices are increasing on the threat, placing subtle downward pressure on mortgage rates.

Source
Weather.com -- Hurricane Central
weather.com, August 25, 2006
http://www.weather.com/newscenter/tropical/index.html?from=hurricane_tracker

Hurricane Katrina's impact continues to loom large over markets. 

After the initial storm was forecasted to miss New Orleans proper, expectations were for the damage to be minor.

Then the floods began.  And then the infrastructure collapsed.  And then refineries shut down. 

And there is more to come.

While Katrina is a human tragedy, the storm is leading to market speculation about the economy, and how long we will feel its effects.  The refinery closures are creating a sense of panic about oil prices and that is pushing mortgage rates lower today.

But that doesn't make this a good day to float.  There is a ton of inherent volatility in the market right now and anything can happen at any time.