IN THIS ISSUE...
Last Week in Review: The labor sector and consumer spending show positive signs.
Forecast for the Week: Investors will be tuned in to the Fed's Monetary Policy Statement.
LAST WEEK IN REVIEW
"What's going on?" Marvin Gaye. A final wave of economic data has rolled in ahead of the Fed's last Federal Open Market Committee meeting of the year. Did the numbers instill confidence that what's going on in the economy is enough to justify a change to long-standing monetary policy?
Following two strong monthly Jobs Reports for October and November, weekly Initial Jobless Claims continue to show a strengthening jobs market. Although claims rose from the week prior, this was the 39th straight week that unemployment benefits held below 300,000, which is a level that signals a strong jobs market.
The improved jobs market—combined with lower prices at the gas pump—also has driven consumer sentiment and spending up modestly.
Based on the current economic climate, investors are betting on a 90 percent chance the Fed will increase its benchmark Fed Funds Rate when it meets December 15 and 16. This rate, which has been near zero since 2008, is the rate at which financial institutions lend money to each other overnight. When this rate changes, other rates could follow based on market reaction and the economy. Stay tuned to the headlines following the Monetary Policy Statement release at 2 p.m. EST on Wednesday!
For now, home loan rates remain in attractive territory with average conforming fixed rates remaining below 4% (per the most recent Freddie Mac weekly Survery).
If you or someone you know has questions about the housing market, refinancing or home loan options, please don't hesitate to contact me.
FORECAST FOR THE WEEK
While the week's releases include consumer inflation, manufacturing and housing data, investors will be awaiting the Fed's release of its Monetary Policy Statement on Wednesday at 2 p.m. EST.
- Consumer inflation, manufacturing and housing data will be released Tuesday in the form of theConsumer Price Index, Empire State Index and Housing Market Index.
- More housing data will be reported on Wednesday with Building Permits and Housing Starts.
- Finally, the Philadelphia Fed Index manufacturing data will be released Thursday, along with weekly Initial Jobless Claims.
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.
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.
By: Michael Borodinsky
Vice President/Regional Builder Branch Manager | Caliber Home Loans
Call Michael: 732-382-2654
Email Michael: Michael.Borodinsky@caliberhomeloans.com
Follow Michael on Twitter: @mikeborodinsky