Today is a holiday-shortened session but that doesn’t mean that the markets will be on vacation.

The day’s big event is Federal Reserve Chairman Ben Bernanke’s speech at the Fed’s annual symposium in Jackson Hole, WY.

Investors will dissect every phrase looking for clues about the economy and housing.

More importantly, markets want some advance notice about whether the Fed will lower the Fed Funds Rate at its next meeting September 18.

It won’t get any.

Just before his address was scheduled to begin, the Fed’s favorite predictor of inflation — the Personal Consumption and Expenditures report — was released and showed that growth is within a tolerable range.

It’s more likely that Bernanke will spend time talking about data that is known (i.e. the PCE report and other measurable statistics) versus data that is unknown (i.e. how the credit markets will impact the U.S. economy in the future).

With fewer traders participating today, expect more volatile action than usual as the three-day Labor Day Weekend begins.

Mortgage rates unexpectedly increased yesterday afternoon as the U.S. stock market staged a late rally.

By the end of the day, the Dow Jones Industrial Average was up 1.9 percent, or 247.77 points.

This is a typical pattern.

When stocks are moving higher, investors want to ride the wave and look for sources of cash. Often, bonds serve as that source.

Now, remember that mortgage rates are based on the price of mortgage bonds. When bond are in demand, bond prices increase and the associated rates fall. When bond are being sold — as what happened yesterday — prices decrease and that pushes mortgage rates higher.

That’s what happened yesterday.

As the DJIA added 150 points in the last two hours of trading, mortgage rates rapidly worsened. If you locked your rate in the afternoon, it may have been markedly worse than if you locked in the morning.

Mortgage rates are expected to be at least 0.125% worse when the markets open this morning.

As mortgage guidelines loosened between 2002 and 2006, homeowners often used their home equity to retire credit card and other consumer debt. They did this by increasing the size of the mortgage and taking “cash out” from their home.

As you’d expect, this type of mortgage transaction is called a “cash out” refinance.

Well, now that mortgage guidelines are tightening, it’s growing more difficult for a homeowner to engage in this type of home loan.

Mortgage lenders are restricting the total amount of equity that can be withdrawn from a home, usually as a percentage of the home’s value.

This may be one reason why the amount of credit card debt is rapidly increasing among Americans.

Throughout May and June, for example, credit card balances increased 12% and 8% respectively even as consumer spending remained relatively flat.

Therefore, we can hypothesize that Americans — unable to “cash out” from their homes — are putting more money on their credit cards and slowly reaching their collective credit limits (upon which the borrowing stops).

When the borrowing stops, spending stops, too, and this has the impact of slowing down the economy.

A slower economy, of course, reduces inflationary pressures and that makes the U.S. dollar stronger to international investors. That strength, in turn, creates buying pressure on mortgage bonds which pushes mortgage rates down for everyone. Naturally, lower rates encourage more borrowing.

Yes, it’s a cycle. And it’s one worth watching.

When the National Association of Realtors® releases its monthly Existing Home Sales report, people tend to watch every word, fact and figure in the statement in hopes of decoding the real estate market.

It’s all wasted energy.

It’s impossible to use the NAR report in everyday living because the NAR report is a national story. Real estate, on the other hand, is not a national market.

All real estate is local.

Think of your own town. There’s at least one each of the following:

• An improving neighborhood
• A declining district
• An abandoned area
• An out-right scary street

In a national report, these regions are lumped together into one measurement.

So, when we see that the median home sale price fell over the last year, or that national inventory rose to a 9.6 month supply, it doesn’t really mean much to your street in your town.

The NAR report lumps every street in every town together into one big blob of data.

Your area may be seeing explosive growth tied to school districts, or affordability, or proximity to transportation, or just plain “good value” — regardless of what national real estate statistics report.

So, as always, be wary of “national” real estate stories — the true story is a local one.