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MORTGAGE TIME Mortgage Market News for the week of Feb. 7, 2014

Compliments of:   Patrick Gardner Mortgage Loan Officer NMLS ID: 378888 415-423-1424 Email me Visit my website   JOBS AND MANUFACTURING FALL SHORT This week’s key economic data showed that the performance of the economy in January was weaker than expected. The shortfalls caused stocks to decline and mortgage rates to improve, but the impact was surprisingly small. Both the Employment report and the ISM Manufacturing data saw big misses. Against a consensus forecast of 185K, the economy added just 113K jobs in January. Also disappointing, many investors had hoped to see a large upward revision to the weak December reading, but it was little changed. The ISM national manufacturing index declined sharply to 51.3, far below the consensus of 56.0. For perspective, the increase in jobs reflects improvement in the labor market, and readings above 50.0 indicate an expansion in the manufacturing sector. The issue is that the pace of economic growth has slowed. The relatively minor impact of this week’s data must be considered in light of the performance of the stock and mortgage markets so far this year. Entering the week, stocks had experienced significant losses, as the Dow was down roughly 5% in January. Similarly, mortgage rates have seen significant improvement since the start of the year. To some degree, investors were already positioned for weak data this week. In addition, questions about the effect of unusually severe weather caused some investors to question how accurately recent data reflects the underlying strength of the economy. ALSO NOTABLE • The Unemployment Rate fell to the lowest level since October 2008 • The 2013 Trade Deficit was the smallest since 2009 • The Treasury will auction $70 billion in securities next week • The European Central Bank (ECB) made no change in rates   WEEK AHEAD Next week, Janet Yellen, the new Fed chair, will testify before Congress on Tuesday and Thursday, and her comments could influence mortgage rates. The most significant economic report will be the Retail Sales data on Thursday. Retail Sales account for about 70% of economic activity. Before that, the JOLTS report, measuring job openings and labor turnover, will come out on Tuesday. Industrial Production, Import Prices, and Consumer Sentiment will be released on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

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 Email me Visit my website 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.