Your Weekly Mortgage Time is Here…Late, but here Nonetheless

MORTGAGE TIME
Mortgage Market News for the week of Jan. 17, 2014
Compliments of:
Patrick Gardner
Mortgage Loan Officer
NMLS ID: 378888
415-423-1424
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INFLATION REMAINS TAME
Mortgage rates began the week with downward momentum following last Friday’s big miss on the Employment report. That, combined with low inflation, more than offset this week’s slightly stronger than expected economic growth data, and mortgage rates ended the week a little lower.

With the Fed’s recent decision to reduce its bond purchases, investors were left evaluating what they believed to be the appropriate level of mortgage rates for the current economic environment. In short, moderate economic growth and low inflation represent relatively favorable conditions for mortgage rates. This week, the December Retail Sales report revealed gains consistent with moderate growth. Since Retail Sales account for about 70% of economic activity, investors pay close attention to this data. Two of the more significant monthly inflation reports also were released this week, the Consumer Price Index (CPI) and the Producer Price Index (PPI), and both confirmed that inflation remains tame. Core CPI was just 1.7% higher than one year ago, well below the Fed’s target level of 2.0%, while Core PPI was even lower at 1.4% on an annual basis.

JOLTS, another report released this week, is quickly gaining prominence with investors because it is considered to be a favorite of incoming Fed Chair Janet Yellen. The JOLTS survey measures Job Openings and Labor Turnover levels, providing another level of insight into labor market conditions. Since the Unemployment Rate has been heavily influenced recently by people leaving the labor force rather than by job gains, investors and Fed officials are eager for additional details to judge the strength of the labor market. The November JOLTS data showed that Job Openings unexpectedly rose to the highest level since March 2008. The percentage of people quitting their jobs was nearly unchanged.

ALSO NOTABLE
The Empire State index rose to the highest level since May 2012
Capacity Utilization increased to the highest level since May 2008
The Fed’s Beige Book reported moderate economic growth
Unemployment in the euro zone remained at a record high 12.1%

WEEK AHEAD
The Economic Calendar will be nearly empty next week. Existing Home Sales, Leading Indicators, and Jobless Claims will be released on Thursday. Mortgage markets will be closed on Monday in Observance of MLK Day.

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