In a week absent of much major economic news, we certainly have had more than enough reporting on the return of Tiger Woods to entertain us. I'm sorry but can someone please explain to me how what Tiger does every second of his life impacts my ability to earn a living? (Sorry I just had to vent for a moment) - Now let's move on to less important things like the markets, interest rates and the state of the economy.
Before I go any further, let me apologize in advance for any sarcasm you may see in this weeks report. I am coming to the realization that there are no experts in the prediction of the economy and my report below will prove that.
Pending Home Sales reported in the month of February increased 8.2%. Experts were expecting a decline of 1%. (Between me and you, I am wondering what information the experts use to make their predictions. I think almost anyone in the real estate or mortgage business could have told them that there was an increase in contract signings in February from January, but somehow the experts were predicting a decline.)
"Hey housing experts, try asking those of us in the business and you will be far more accurate in your predictions."
The rapid increase of mortgage rates running from last week into this week has subsided for the moment. Last week's better than expected economic reports were the driving force behind the increases. This week's economic reports have once again renewed concerns over the pace of the recovery and the global economy. The major reports contributing to the reversal in optimism are:
• Concerns over the stability of the Greek economy have the dollar rising in value and pushing investors toward the purchase of U.S. securities driving down bond yields..
• Jobless claims unexpectedly rose this week renewing concerns about employment.
• The 10YR treasury auction had much greater demand than expected driving bond yields lower.
In regard to the treasury auction, the concern has been that once the Fed stopped their bond re-purchase program, investors would demand higher yields driving up interest rates. Although it started out like that last week, the focus now seems to have turned back to the fact that the economy is still not very strong and the safety of U.S. treasuries is where institutional investors want to invest their money.
Ben Bernake also released a statement on the economy which was interpreted as the government still predicting economic growth and recovery to remain slow for quite some time. Additionally, housing continues to remain a big concern and a drag on the recovery as well.
Next week may be a very volatile week in the markets in that unlike this week which was quiet, next week a number of significant reports are being released. (Buckle up it could get rough)
• Wednesday April 14th - Consumer Price Index and Retail Sales Reports
• Thursday April 15th - Weekly Jobless Claims, Industrial Production and the Housing Market Index
• Friday April 16th - Housing Starts and Consumer Sentiment
Your Mortgage Consultant
JJ Mack
916-517-1800 x300
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