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Mortgage Times
Sorry for the delay.
Mortgage Market News for the week ending December 7, 2007 Events This Week: Employment Healthy Wage Inflation Up Productivity Jumped Manufacturing Mixed Events Next Week: Mon 12/10 Pending Sales Tues 12/11 FOMC Meeting Thurs 12/13 PPI Retail Sales Fri 12/14 CPI Ind. Production Job Growth Remains Healthy Friday's highly anticipated Employment report was expected to be the main event last week, and it did not disappoint. In November, the US economy added 94K new jobs, a little above the consensus forecast, although the revisions to prior months removed 44K jobs. As expected, the weak sectors included finance, real estate, and construction. In addition, the report contained bad news for mortgage markets on inflation, as average Hourly Earnings, a proxy for wage growth, increased at a sharp 3.8% annual rate. Mortgage markets lost ground after the news, mostly due to the implications for inflation, and mortgage rates finished the week modestly higher. The Employment report was the final piece of major economic data before Tuesday's FOMC meeting. Investor expectations are now for about a 50% chance of a half point rate cut and a near certainty of at least a quarter point cut. Fed officials have repeatedly stated that the risks of slower economic growth have increased in recent weeks, but the specter of higher future inflation makes the Fed reluctant to cut rates too much. On Thursday, the Bush administration unveiled a plan to assist as many as 1.2 million homeowners faced with the prospect of higher future mortgage rates. The goal is to help borrowers who are capable of paying at their current rates, but who would be unable to afford the payments when they reset higher. Included will be certain borrowers with adjustable-rate subprime loans on owner-occupied homes. Proposed remedies include freezing the current mortgage rate, refinancing the loan, or offering credit counseling. The initiative is expected to reduce the number of foreclosures and help stabilize home prices, which would provide a boost to the economy. The stock market reacted very favorably to the news, while the prospect of faster economic growth spooked mortgage market investors.
Last week:-0.24% This week:+0.10% Stocks (weekly): Dow:13,646+289 NASDAQ:2,709+41 Week Ahead The highlight of next week's full Economic Calendar will be Tuesday's FOMC meeting, and the announcement of the Fed's decision will be at 2:15 et. The only economic data before the meeting will be Monday's release of Pending Home Sales, a leading indicator of future housing market activity. The biggest economic report next week will be Friday's Consumer Price Index inflation report. Almost without exception, higher inflation leads to higher interest rates, and the Consumer Price Index (CPI) is the most widely watched indicator. CPI looks at the price change for those finished goods which are sold to consumers. Thursday, the Producer Price Index (PPI) inflation report will come out. The PPI inflation data focuses on the increase in prices of "intermediate" goods used by companies to produce finished products. The same day, the Retail Sales report will provide a read on the health of the economy. Consumers account for about 70% of economic activity, and this report is a major indicator of spending levels by consumers. Industrial Production, another important indicator of economic activity, will come out on Friday. admin@corefinancegroup.com |
Re: Mortgage Times
Good news on the jobs front.
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