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For the week of May 14, 2018 | Vol. 16, Issue 20

 

 

In This Issue  

 

 

 

 

Last Week in Review: Consumer and wholesale inflation were tame in April, while geopolitical events also made headlines.

Forecast for the Week: This week's busy calendar features key reports on housing, manufacturing and retail sales.

View: Learn about the four behaviors that transform ordinary people into world-class leaders.

 

 

 

 

 


Last Week in Review  

 

 

 

 

"Are you optimistic 'bout the way things are going?" Chicago. Tame consumer prices in April helped eased fears of rising inflation.

The Consumer Price Index (CPI) rose 0.2 percent in April, just below expectations, the Bureau of Labor Statistics reported. This was down from the 2018 high of 0.5 percent recorded in January. The numbers revealed an uptick in energy and food prices which was offset by a decline in demand for used cars and trucks. The Core CPI, which strips out volatile food and energy prices, rose 0.1 percent, also below expectations.

Inflation at the wholesale level was also tame in April as the Producer Price Index (PPI) rose 0.1 percent. Core PPI rose 0.2 percent, as expected.

Tame inflation is typically good for Mortgage Bonds, as well as the home loan rates tied to them, because inflation reduces the value of fixed investments like Bonds. And Mortgage Bonds were boosted by the tame inflation data in the latest week.

It's also important to remember that many factors impact both Stocks and Bonds. Strong economic news can benefit Stocks (sometimes at the expense of Bonds), while geopolitical turmoil can have the opposite effect. Stocks received a boost in the latest week when energy Stocks lifted the entire market, as oil prices spiked after President Trump announced his decision to withdraw from the Iran nuclear deal. The release of prisoners from North Korea and the scheduling of a meeting between President Trump and Kim Jong-un also lifted some uncertainty and helped the recent rise in Stock prices.

Investors will be watching headlines from the Middle East and Korea closely in the coming weeks as they decide where to put their investing dollars.

For now, though, home loan rates have trended higher this year, they remain attractive and near historically low levels.

If you or someone you know has any questions about home loans, please contact me. I'd be happy to help.

 

 

 

 

 


Forecast for the Week  

 

 

 

 

Did the rebound seen in March Retail Sales continue in April? Are builders making a dent in inventory shortages around the country? This week's reports may provide some answers.

  • Look for Retail Sales data on Tuesday.
  • Manufacturing data from the Empire State Index and Philadelphia Fed Index will be released Tuesday and Thursday, respectively.
  • The NAHB Housing Market Index will be delivered on Tuesday, followed by Housing Starts and Building Permits on Wednesday.
  • As usual, weekly Initial Jobless Claims will be released on Thursday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices 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 are 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, tame inflation data helped boost Mortgage Bonds in recent days.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday May 11, 2018)

Japanese Candlestick Chart

 

 

 

 

 



The Mortgage Market Guide View...  

 

 

 

 

   

 

 

 

 

Business Book Look
"The CEO Next Door"


There are many falsehoods about what it takes to succeed. After two decades of advising CEOs and executives and the in-depth analysis of over 2,600 leaders and 13,000 hours of interviews, authors Elena Botelho and Kim Powell have overturned many of these myths.

In "The CEO Next Door," Botelho and Powell share more about the four key traits many successful CEOs have, which are traits we can apply in our own careers: decisiveness, reliability, adaptability and the ability to engage without fear of conflict.

"The CEO Next Door" shows you how to develop field-tested leadership skills that make a difference. The actionable advice on how to make faster decisions, build a routine that grows relationships, be more visible and memorable to the right people, and deliver consistently will help you accelerate a path to success no matter where you are in your career.

On both the New York Times and Wall Street Journal bestseller lists, "The CEO Next Door" is available on Amazon or at your favorite local bookstore.

Stay tuned for another Business Book Look next month!

Source: Amazon

Economic Calendar for the Week of May 14 - May 18

Date

ET

Economic Report

For

Estimate

Actual

Prior

Impact

Tue. May 15

08:30

Retail Sales

Apr

NA

 

0.6%

HIGH

Tue. May 15

08:30

Retail Sales ex-auto

Apr

NA

 

0.2%

HIGH

Tue. May 15

08:30

Empire State Index

May

NA

 

15.8

Moderate

Tue. May 15

10:00

Housing Market Index

May

NA

 

69

Moderate

Wed. May 16

08:30

Housing Starts

Apr

NA

 

1.319M

Moderate

Wed. May 16

08:30

Building Permits

Apr

NA

 

1.354M

Moderate

Thu. May 17

08:30

Jobless Claims (Initial)

5/12

NA

 

211K

Moderate

Thu. May 17

08:30

Philadelphia Fed Index

May

NA

 

23.2

Moderate

 

 

 

 

 

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

 

As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

If you prefer to send your removal request by mail the address is:

Bob Paola
8160 Corporate Park Drive, Suite 135
Cincinnati, Ohio 45242

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