Next week starts what I call Housing Week. There will be 3 different reports on the housing market which will give us an indicator on the health and recovery of the market. The reports scheduled to be released are Housing Starts, Existing Home Sales, and the FHFA House Price Index. Although these are not all of the housing reports, these are major ones which will certainly make headlines and can have an impact on the stock market. It is important to remember that these reports are for the prior month. Housing can change week by week and what is the latest report may not necessarily reflect what is happening today.
Mortgage rates, although they have risen off of their record lows, continue to remain far below where anyone ever expected them to be. The likely hood of them remaining low is high for now because demand for government securities remains strong. The government’s 10YR Treasury Auction this week drew more demand than was expected. This demand demonstrates that investors are still very weary of what is happening in Europe and continue to remain on the sidelines of the U.S. stock market. Although mortgage rates do not tie in directly to the government treasury prices, they certainly are an indicator on the movement of mortgage rates.
The rumor mill and speculation was in full swing on Thursday in the stock market. With yet another poor unemployment report, someone started the talk that the government is more likely to act on providing more stimulus to help move the economy towards recovery. I don’t know who started the rumor, but I do know it was NOT Fed Chairman Ben Bernake.
The irony of the speculation is that it was only based upon the First Time Jobless Claims that rose again by 6,000. The claims for the prior week were 387,000 which is moving closer to the artificial crisis benchmark of 400,000 that we saw during the recession.
Please keep in mind, that last week Bernake gave no indication that another round of stimulus was coming any time soon. Yesterday nothing was said, either, despite the poor employment report. However investors have taken it upon themselves to guess what the Fed may do, and that is driving the stock market.
Inflation continues to remain well under control. The Producer Price Index declined .1% which was a larger decline than was expected by analysts. The Consumer Price Index also dropped due to the dropping energy prices. When you remove energy from the equation, the CPI actually increased by .2%, which is considered a moderate increase but well under control.
Next week’s economic reports are:
- Tuesday June 19th – Housing Starts
- Wednesday June 20th - MBA Applications, FOMC Announcement and Forecasts
- Thursday June 21st - First Time Jobless Claims, Existing Home Sales & FHFA House Price Index
Sincerely,
Cindy Tomlinson
Loan Officer
Loan Officer
USLending Company
DRE Lic # 01520422
NMLS # 214851
NMLS # 214851
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