MMG Weekly 3/13/18

Guy R. Vetrano NMLS# 183357
Senior Loan Officer
Bay Equity Home Loans
Phone: 480.500.6000 x 6017
Mobile: 602-692-7196
gvetrano@bayeq.com
www.vetranoteam.com

In This Issue  
Last Week in Review: Job growth surges in February, rising for the second month in a row.

Forecast for the Week: News on housing, inflation and retail sales highlight a busy week.

View: Before using royalty-free images for your marketing materials, read about this scam alert.


Last Week in Review  
“Happy ever after in the marketplace.” The Beatles. Many job hunters were singing a happy tune as job growth surged in February.

Non-Farm Payrolls rose by 313,000 last month, well above the 210,000 expected, the Bureau of Labor Statistics reported. This was the largest gain since July 2016. December’s and January’s figures were also revised higher by a total of 54,000 new jobs. The Unemployment Rate remained at 4.1 percent.

The report also showed that wage growth cooled, rising just 0.1 percent. Year over year, wage growth slowed to 2.6 percent from the 2.9 percent in January, which has soothed fears of wage inflation. Overall, this was a solid report.

Research firm CoreLogic reported that home prices, including distressed sales, rose 6.6 percent from January 2017 to January 2018. Home prices were up 0.5 percent from December to January. However, 48 percent of the top 50 markets were considered overvalued.

President Trump signed off on tariffs of 25 percent on imported steel and 10 percent on imported aluminum. The tariffs exempt Mexico and Canada for now and leave the door open for negotiations with other countries. Investors will be watching closely to see how the markets react as this news develops.

Mortgage Bonds have been trading in a sideways pattern in recent weeks, unable to make any significant improvement. Home loan rates have risen for the last nine weeks but remain near historic lows.

If you or someone you know has any questions about home loan rates or products, please reach out at any time. I’m always happy to help.


Forecast for the Week  
Data will be plentiful, with key reports on retail sales, inflation and housing.
  • Inflation data from the Consumer Price Index will be released on Tuesday, followed by the Producer Price Index on Wednesday.
  • The Retail Sales report will also be released on Wednesday.
  • From the manufacturing sector, the Philadelphia Fed and Empire State Indexes will be released on Thursday.
  • Look for weekly Initial Jobless Claims on Thursday as well.
  • In the housing sector, the NAHB Housing Market Index will be released Thursday, while Friday brings Housing Starts and Building Permits.
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, Mortgage Bonds continue to trade in a sideways pattern. Home loan rates have trended higher this year but remain historically attractive.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Mar 09, 2018)
Japanese Candlestick Chart

The Mortgage Market Guide View…  
Scam Alert: Royalty-Free Image Sites

A quick search for royalty-free PNG, JPG and GIF files on Google Images will turn up millions of free or public-domain graphics you can use. But unsuspecting small business owners and content creators are finding out using some of those images may have an unusually high price tag.

How does the scam work?
If the image is used and then discovered on the web, the business or content creator may receive a letter or email demanding payment for copyright violation from the image holder’s attorney. If Google is notified of the violation, the content creator also stands to lose hard-won website ranking.

Except, the likelihood is that the site the image came from is an offshore setup, which relies on the threat of legal action and blackmail for revenue, rather than the sale of stock images.

How can you prevent this from happening to you?

Take screen captures of the website offering the specific image and save it as proof that you used the graphic in good faith according to the website policies.

In the event of a copyright claim, you will have to decide if you or your company wishes to dispute or make the payment, which is often several thousand dollars. Most companies pay because it’s cheaper than a legal battle or to avoid putting their website SEO in jeopardy. This, of course, is the response the scammers were hoping for from the start.

Don’t use royalty-free images from sources you haven’t vetted. Even then, there’s no guarantee. Whenever in doubt, the best policy is to purchase images from a well-known site and save your receipt.

Sources: LinkedIn, Active Rain, Imagify

Economic Calendar for the Week of March 12 – March 16
Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. March 13
08:30
Consumer Price Index (CPI)
Feb
NA
0.5%
HIGH
Tue. March 13
08:30
Core Consumer Price Index (CPI)
Feb
NA
0.3%
HIGH
Wed. March 14
08:30
Retail Sales
Feb
NA
-0.3%
HIGH
Wed. March 14
08:30
Retail Sales ex-auto
Feb
NA
0.0%
HIGH
Wed. March 14
08:30
Producer Price Index (PPI)
Feb
NA
0.4%
Moderate
Wed. March 14
08:30
Core Producer Price Index (PPI)
Feb
NA
0.4%
Moderate
Thu. March 15
08:30
Philadelphia Fed Index
Mar
NA
NA
HIGH
Thu. March 15
08:30
Empire State Index
Mar
NA
13.1
Moderate
Thu. March 15
08:30
Jobless Claims (Initial)
3/10
NA
231K
Moderate
Thu. March 15
10:00
Housing Market Index
Mar
NA
72
Moderate
Fri. March 16
08:30
Housing Starts
Feb
NA
1.326M
Moderate
Fri. March 16
08:30
Building Permits
Feb
NA
1.396M
Moderate
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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.
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