MMG Weekly 6/4/18

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

In This Issue  

Last Week in Review: Geopolitical headlines moved the markets. May job growth beat expectations.

Forecast for the Week: With a light economic calendar, will headlines from across the globe continue to move the markets?

View: Social media content ideas to start the summer strong.

Last Week in Review  

“I put that work in, day in, day out.” Kelly Clarkson. More people were putting work in, as job growth beat estimates in May.

The Bureau of Labor Statistics reported that Non-Farm Payrolls rose 223,000 in May, above expectations and up from 159,000 in April. April and March were revised for an increased total of 15,000 more jobs than previously reported. May Average Hourly Earnings also rose 0.3 percent, in line with estimates, and up from 0.1 percent in April. Year over year, earnings were up 2.7 percent in May, from the 2.6 percent for the year ended in April. The Unemployment Rate for May fell to 3.8 percent, the lowest level since April 2000. Overall, the Jobs Report was strong and shows a strengthening labor market.

Annual Core Personal Consumption Expenditures (PCE) showed that inflation rose 1.8 percent in April, while March was revised lower to 1.8 percent from 1.9 percent. Core PCE, which excludes volatile food and energy prices, is the Fed’s favorite inflation gauge. While inflation remains steady, it is still below the Fed’s 2 percent target. Since inflation reduces the value of fixed investments, like Mortgage Bonds, it can hurt Mortgage Bonds and the home loan rates tied to them. It will be important to see where inflation heads in the coming months.

In housing news, home prices continued to edge higher in March due in a large part to low inventories of homes for sale on the market. The S&P Case-Shiller 20-City Home Price Index rose 6.8 percent from March 2017 to March 2018, matching the February gain.

Although the second reading on first quarter 2018 Gross Domestic Product was also released last week, it came and went with little fanfare, near unchanged from the first reading. The real market mover was the geopolitical events throughout Europe. Political turmoil in Italy and Spain pushed investors into the safe haven of the Bond markets early in the week, but those fears eased in recent days as both countries came to an agreement.

Mortgage Bonds were able to squeak out small gains in the latest week as they rose to near 2018 highs. Home loan rates declined and remain historically attractive.

If you or someone you know has any questions about home loans, please contact me. I’d be happy to help.

Forecast for the Week  

After last week’s heavy economic calendar, this week’s reports are on the lighter side.
  • The ISM Services Index will be released on Tuesday.
  • Productivity data for the first quarter will be delivered on Wednesday.
  • As usual, weekly Initial Jobless Claims releases on Thursday.
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 rose to near 2018 highs in the latest week. Home loan rates remain attractive.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jun 01, 2018)

Japanese Candlestick Chart

The Mortgage Market Guide View…  

4 Meaningful Social Media Content Ideas for June

Social media is one of the most useful tools for keeping clients and prospects engaged, demonstrating your expertise, and expanding influence in your market. But coming up with things to post isn’t always easy! Here are four great ideas to help inspire your social media activity this month.

June is National Safety Month and there are countless ways to share something to help fans and followers protect the things they love most. Promote bike helmet safety for kids or sunscreen tips, or blog about home protection, best insurance practices, identity theft or other ways consumers can avoid pitfalls in your specific industry.

Grade school is out for summer so it’s a great time to blog or post about activities or resources in your locale. Get involved with a summer-school program, Boys and Girls Club, summer camp, or your local library to host events for students. Mention upcoming event dates and topics on your profiles, and be sure to share pictures of past activities as the summer months progress.

High school graduates and parents preparing for college life can always use helpful financial or credit advice, or your best ways to make money stretch. Participate in their success by offering a small grant or two to help with moving expenses, new furniture or the journey to school. Sponsor or attend the local high school or college graduation and share your reflections.

Father’s Day is June 17 and a great time to give attention to what the fathers in our lives have meant to us along the way. If humor is suitable for your audience, ask folks to share their best eye-rolling “dad jokes” and offer a gift card for coffee or the local hardware store for the winner.

Stay tuned next month for even more great social media content ideas!

Source: Forbes

Economic Calendar for the Week of June 04 – June 08
Economic Report
Tue. June 05
ISM Services Index
Wed. June 06
Thu. June 07
Jobless Claims (Initial)

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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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