The following was written by Michael Borodinsky, Vice President/Regional Builder Branch Manager of Caliber Home Loans
The Bond markets were closed in honor of Veterans Day, and the brave men and women who have served and sacrificed to protect and preserve our great nation. The economic calendar was quiet the rest of the week, but there are some key highlights to note.
In the labor sector, Weekly Initial Jobless Claims came in at 290,000. Claims have remained below 300,000 for nine straight weeks—a feat that has not occurred since 2000. In addition, claims are 20 percent lower than they were this time one year ago. However, all is not golden as 18.2 million Americans still say they can't find a full-time job. This is a big number, considering that we're five years into an economic recovery. While the labor sector is improving, there is still more work needed ahead.
Oil prices continue to drift lower, reaching levels not seen since October 2011. This slide lower has put extra cash in consumers' pockets just in time for the holiday shopping season, and it helped Retail Sales in October bounce back from the negative numbers seen in September. However, all-time price highs in meat, dairy and produce could tap into these savings at the pump.
Looking ahead, housing data is abundant in the coming week. And while the hot housing numbers from 2013 have cooled a bit this year, recent data suggests that the housing recovery is still intact. Existing Home Sales in September touched their highest level in a year, while New Home Sales hit a six-year high. These will be important numbers to watch as we look ahead to the housing sector, and whether its recovery continues, next year.
The bottom line is that home loan rates remain near some of their best levels of the year, and now is a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.
Important manufacturing, inflation and housing reports are ahead. Plus, the minutes from the Fed’s latest meeting will be released.
- Look for a double dose of manufacturing news, with the Empire State Index on Monday and the Philadelphia Fed Index on Thursday.
- Two key inflation reports are ahead. The wholesale-measuring Producer Price Index will be delivered on Tuesday, followed by the Consumer Price Index on Thursday.
- Housing news is abundant this week. The NAHB Housing Market Index comes out on Tuesday, housing starts and building permits will be released Wednesday and existing home sales follows on Thursday.
- As usual, weekly initial jobless claims will also be announced on Thursday.
In addition, investors will be closely scrutinizing the minutes from the late October Federal Open Market Committee meeting. The minutes, which will be released, will reveal details of the Fed's decision to end its latest round of quantitative easing. They could also give more clues as to the timing of rate hikes, which could lead to volatility in the markets.
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 ond on which home loan rates are based.
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, mortgage bonds continue to trade in a sideways pattern. Home loan rates remain near 18-month lows and I will continue to monitor them closely.
Chart: Fannie Mae 3.5%% Mortgage Bond (Nov 14, 2014)
Economic Calendar for the Week of November 17 - November 21
By: Michael Borodinsky
Vice President/Regional Builder Branch Manager | Caliber Home Loans
Call Michael: 732-382-2654
Email Michael: firstname.lastname@example.org
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