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Last Week in Review: Change is coming to the Fed, but will it be coming to the
Fed's Bond purchase program?
Forecast for the Week: Look for important news on housing,
inflation, retail sales and more. Plus the minutes from the Fed's October
meeting will be released.
View: Don't let the flu slow down your productivity this year. See
the important tips below.
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It's been said that
the only constant is change. And change is soon coming to the Fed, as Fed Chairman Ben
Bernanke is stepping down at the end of January. But perhaps the bigger
question is whether change is coming to the Fed's current Bond purchase
program (known as Quantitative Easing). Read on for details.
Remember that the Fed has been purchasing $85 billion in Bonds and
Treasuries each month to stimulate the economy and housing market. This
includes Mortgage Bonds, to which home loan rates are tied. Last week,
incoming Federal Reserve Chairwoman Janet Yellen was on Capitol Hill for
her confirmation hearing, and she signaled that the Fed's current Bond
purchase program will continue, as the economy is still running below its
potential. This should be good news for Bonds and home loan rates.
In economic news to note, Weekly Initial Jobless Claims continue to hover
near the 340,000 mark while the Empire State Manufacturing Index came in
weaker than expected. The latter report also revealed that labor market
conditions are weak, with the index falling four points. This report backs
up Yellen's statement in her prepared text at her confirmation hearing
that, "Unemployment is down from a peak of 10 percent, but at 7.3
percent in October, it is still too high, reflecting a labor market and
economy performing far short of their potential."
What does this mean for home loan rates? The Fed has said
that its decision regarding when to taper its Bond purchases will be
dependent on economic data. It will be important to monitor economic
reports in the coming weeks, as they will determine whether the Fed begins
to taper its purchases later this year or in 2014. The timing of this
decision could have a big impact on home loan rates heading into 2014.
The bottom line is that now remains a great time to consider a home
purchase or refinance, as home loan rates remain attractive compared to
historical levels. Let me know if I can answer any questions at all for you
or your clients.
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- Economic
data kicks off on Monday with housing news from the National
Association of Home Builders Housing Market Index, followed by Existing
Home Sales on Wednesday.
- Tuesday
brings the Employment Cost Index for the third quarter, which
measures the costs of labor for businesses.
- Consumers'
attitudes toward spending will be revealed in the Retail Sales
report on Wednesday.
- Inflation
data from the Consumer Price Index and the Producer Price
Index will be released on Wednesday and Thursday, respectively.
- Weekly
Initial Jobless Claims will be reported as usual
on Thursday.
- Also
on Thursday, look for manufacturing data from the Philadelphia Fed
Index.
In addition, the
minutes from the Fed's October meeting of the Federal Open Market Committee
will be released on Wednesday. It will be important to see if the minutes
reveal any news about the Fed tapering its Bond purchase program.
Remember: Weak economic news normally causes money to flow out of Stocks
and into Bonds, helping Bonds and home loan rates improve, while strong
economic news normally has the opposite result. The chart below shows
Mortgage Backed Securities (MBS), which are the type of Bond that home loan
rates are based on.
When you see these Bond prices moving higher, it means home loan
rates are improving -- and when they are moving lower, home loan rates are
getting worse.
To go one step further -- a red "candle" means that MBS worsened
during the day, while a green "candle" means MBS improved during
the day. Depending on how dramatic the changes were on any given day, this
can cause rate changes throughout the day, as well as on the rate sheets we
start with each morning.
As you can see in the chart below, Bonds and home loan rates improved last
week. With several key reports releasing this week, I'll be watching the
markets closely.
Chart: Fannie Mae 4.0%
Mortgage Bond (Friday Nov 15, 2013)
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Productivity Points
Flu-Fighters for the Digital Age
With so many things to look forward to during the holidays--especially for
business people who want to take some time out to prepare for the year
ahead--the last thing anyone needs is to catch the flu.
Americans spend approximately $4 billion on over-the-counter cold and flu
remedies, and that figure doesn't touch how much time and productivity is
lost on sick time in the workplace, doctor visits, and money for
prescriptions.
But now, there's a few ways to stay up-to-date on the latest flu
information:
Flu Near You
is a free site, and the brainchild of Boston Children's Hospital. When
someone reports symptoms the map registers a "pin." Then you
simply click on that pin to learn more about the symptoms or severity of
the case in the specified area. You can also register to find out when flu
cases are reported near you, and participate to help others learn more
about the spread of the flu.
Flu Tracker is a free app for Android users that
uses up-to-the-minute data from the Centers for Disease Control and Google
Flu Vaccine Finder.
Fight The Flu and CDC Influenza are for iPhone users and feature
similar tracking of flu virus around the country, with special sections on
prevention and minimizing a flu virus should you get it accidentally.
Here's to a happy and flu-free holiday season! And don't forget to
share this health-boosting information with your team, clients, and
colleagues.
Economic
Calendar for the Week of November 18 - November 22
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Date
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ET
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Economic Report
|
For
|
Estimate
|
Actual
|
Prior
|
Impact
|
|
Mon. November 18
|
10:00
|
Housing Market
Index
|
Nov
|
NA
|
|
55
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Moderate
|
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Tue. November 19
|
08:30
|
Employment Cost
Index (ECI)
|
Q3
|
NA
|
|
0.5%
|
HIGH
|
|
Wed. November 20
|
08:30
|
Retail Sales
ex-auto
|
Oct
|
NA
|
|
0.4%
|
HIGH
|
|
Wed. November 20
|
08:30
|
Consumer Price
Index (CPI)
|
Oct
|
NA
|
|
0.2%
|
HIGH
|
|
Wed. November 20
|
08:30
|
Retail Sales
|
Oct
|
NA
|
|
-0.1%
|
HIGH
|
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Wed. November 20
|
10:00
|
Existing Home
Sales
|
Oct
|
NA
|
|
5.29M
|
Moderate
|
|
Wed. November 20
|
02:00
|
FOMC Minutes
|
10/30
|
NA
|
|
NA
|
HIGH
|
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Thu. November 21
|
08:30
|
Jobless Claims
(Initial)
|
11/16
|
NA
|
|
NA
|
Moderate
|
|
Thu. November 21
|
08:30
|
Producer Price
Index (PPI)
|
Oct
|
NA
|
|
-0.1%
|
Moderate
|
|
Thu. November 21
|
08:30
|
Core Producer
Price Index (PPI)
|
Oct
|
NA
|
|
0.1%
|
Moderate
|
|
Thu. November 21
|
10:00
|
Philadelphia Fed
Index
|
Nov
|
NA
|
|
19.8
|
HIGH
|
|
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test test test
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contained in this newsletter has been prepared by an independent
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