Retail Sales and Consumer Sentiment Soar
In This Issue
Last Week in Review: Consumer sentiment and retails sales are on the rise, while oil and wholesale inflation are moving lower. What about home loan rates?
Forecast for the Week: The last Fed meeting of the year is ahead, plus news on housing, inflation and manufacturing.
Last Week in Review
"Up, up and away." Consumer sentiment and retail sales may have soared higher, but both wholesale inflation and oil prices are on the decline. What does all of this mean for the markets and home loan rates? Read on for the breakdown.
Consumer sentiment surged to 93.8 in December, reaching the highest level since January 2007 and the recent recession. In line with that sentiment, consumers also opened their wallets in November, spending money on goods ranging from cars to clothing as the holiday shopping season got underway. Retail Sales rose by 0.7 percent in November, which was the fastest rate in eight months.
One thing helping both consumer sentiment and retail sales of late is the continued decline in prices at the pump. In fact, the International Energy Agency recently cut its outlook for global oil demand growth in 2015. The markets have been especially volatile in recent weeks, and this news only added to the volatility. Despite the choppy trading in both Stocks and Bonds, home loan rates (which are tied to Mortgage Bonds) remain near historic lows.
Also of note, thanks to the decline in oil, the November Producer Price Index showed that inflation declined at the wholesale level. This is Bond-friendly news, since inflation reduces the value of fixed investments like Bonds, meaning this is also good news for home loan rates.
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.
Forecast for the Week
Look for key reports on housing, manufacturing and inflation. Plus, the Fed meets.
Monday's Empire State Index and Thursday's Philadelphia Fed Index will be the last major reports from the manufacturing sector in 2014.
In housing news, look for the National Association of Home Builders Housing Market Index on Monday, followed by Housing Starts and Building Permits for November on Tuesday.
On Wednesday, we'll get a read on inflation with the Consumer Price Index.
As usual, Weekly Initial Jobless Claims will be delivered on Thursday.
In addition, the last Federal Open Market Committee meeting of 2014 begins on Tuesday, ending Wednesday with the monetary policy statement being released at 2:00 p.m. EST. Stay tuned, as market volatility is always possible when the Fed meets!
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 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.
By: Michael Borodinsky
Vice President/Regional Builder Branch Manager | Caliber Home Loans
Call Michael: 732-382-2654
Email Michael: email@example.com
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