MMG Weekly 5/23/16

 

 

 

 

 

 

 

Guy R. Vetrano NMLS# 183357
Mortgage Loan Originator
Bay Equity Home Loans
Phone: 480.500.6000 x 6017
Mobile: 602-692-7196
E-fax: 602.532.7304
gvetrano@bayeq.com
www.bayequityhomeloans.com/guy-vetrano

In This Issue  

Last Week in Review: Housing Starts and consumer inflation rise, while manufacturing data remains murky.Forecast for the Week: The Fed will dig into more housing news, Gross Domestic Product and consumer sentiment prior to June’s meeting.

View: Bounce back from a poor first impression.


Last Week in Review  

“There’s something happening here, and what it is ain’t exactly clear.” Buffalo Springfield. Recent data continues to paint a confusing picture about the state of our economy.

In housing news, April Housing Starts jumped 6.6 percent from March, above expectations. However, year-over-year Housing Starts were down 1.7 percent from April 2015. Building Permits, a sign of future construction, didn’t come in as high as expected. But they still increased from March, rising 3.6 percent to an annual rate of 1.11 million. Similarly, Existing Home Sales experienced their second consecutive month of gains, increasing 1.7 percent from March to April 2016.

Manufacturing is still muddling along, despite the recent decline in the dollar. This is according to key regional manufacturing reports out of Philadelphia and New York, which were worse than expected. A stronger dollar has been blamed for the manufacturing slump, but the problems may be a bit deeper than just currency.

Consumer inflation rose in April at its fastest rate since February 2013. The Consumer Price Index (CPI), which measures the price of a representative basket of goods and services purchased by households, rose 0.4 percent due to higher gasoline prices and rising rents. Core CPI, which strips out volatile food and energy, was in line with expectations. Inflation reduces the value of fixed investments, meaning it is like kryptonite to Mortgage Bonds (and also to home loan rates, which are tied to Mortgage Bonds). It will be important to see if this pop in inflation is a trend.

The Fed will be closely monitoring inflation, housing, manufacturing and more in advance of its June 14-15 meeting. Minutes just released from the April Federal Open Market Committee (FOMC) meeting show several Fed members believe it’s time to raise the Fed’s benchmark Fed Funds Rate when they meet again in June. This is the rate banks lend money to each other overnight. If the Fed takes action, volatility in the markets could rise. Time will tell if this will be good news for Mortgage Bonds and home loan rates.

For now, home loan rates remain near historic lows. If you or anyone you know has any questions about home loan rates or products, please give me a call.


Forecast for the Week  

As May enters its last full week, more housing news, Gross Domestic Product and consumer sentiment will be offered up for the Fed to analyze prior to June’s Federal Open Market Committee (FOMC) meeting.
  • Housing data for the week includes New Home Sales on Tuesday and Pending Home Sales Thursday.
  • Thursday also brings Durable Goods Orders and weekly Initial Jobless Claims.
  • Friday wraps up with the Consumer Sentiment Index and the second estimate for first quarter Gross Domestic Product.
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 declined in recent days following the release of the April FOMC minutes.

Chart: Fannie Mae 3.0% Mortgage Bond (Friday May 20, 2016)

Japanese Candlestick Chart


The Mortgage Market Guide View…  

How to Recover from a Bad First ImpressionYou never get a second chance to make a first impression. But if you’ve flubbed with a new coworker or potential vendor or client, fear not. You have the chance to make an even better second impression. Here are some tips that can help you recover and build a business relationship:

Understand first impressions. People often won’t realize if there’s an explanation for your initial impression. Perhaps you just got a parking ticket, your child woke up with strep throat or a technology outage at work disrupted everything. Things happen to everyone.

Circle back and explain yourself. Most people want to be fair and will give you a second chance, especially if you give them a good reason. A well-timed call or email to explain why you were having “one of those days” can break the ice, showing you’re human as well as humble. Everybody has off days, and admitting it will usually be seen as a strength as long as off days don’t become frequent and laden with excuses.

Play a role in their success. Clearly demonstrate how you can enhance their work or world. Seek out assignments and opportunities that put you directly in their path, and where you’ll be able to show your value. You could also share a great idea that’s benefitted you.

Up your performance and sustain it. If you’ve been pigeonholed for a certain behavior, outperform that perceived behavior and make it the norm.

Please feel free to pass these helpful tips along to your team, clients and colleagues.

Sources: Business Insider, Harvard Business Review

Economic Calendar for the Week of May 23 – May 27
Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. May 24
10:00
New Home Sales
Apr
NA
511K
Moderate
Thu. May 26
08:30
Jobless Claims (Initial)
5/21
NA
278K
Moderate
Thu. May 26
08:30
Durable Goods Orders
Apr
NA
0.8%
Moderate
Thu. May 26
10:00
Pending Home Sales
Apr
NA
1.4%
Moderate
Fri. May 27
08:30
Gross Domestic Product (GDP)
Q1
NA
0.5%
HIGH
Fri. May 27
08:30
GDP Chain Deflator
Q1
NA
0.7%
HIGH
Fri. May 27
10:00
Consumer Sentiment Index (UoM)
May
NA
95.8
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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