Friday's release of October's unemployment report could move interest rates!  May be time to lock-in!

By Ed Dorame / Guarantee Home Mortgage | Oct 29, 2012

Ed Dorame

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Over 20 years experience!

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Direct Line: 206-510-2118

Email: ed@gmseattle.com

 

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If you, or anyone you know is thinking about refinancing or purchasing, please keep me in mind!

 

For the week of October 29, 2012 – Vol. 10, Issue 44


>> Market Update

 

QUOTE OF THE WEEK... "Action may not always bring happiness; but there is no happiness without action."--Benjamin Disraeli, British politician

INFO THAT HITS US WHERE WE LIVE... The rest of the economy may be barely moving forward, but there's clearly some action in the housing market. New single-family home sales were up 5.7% for September and up 27.1% over a year ago. The seasonally adjusted annual rate of 389,000 units is the strongest sales pace since April 2010. The median sales price was $242,400, up almost 12% versus a year ago. 145,000 new homes were on the market, a 4.5 months' supply at the current sales rate, down from a record 12.1 months in January 2009.

Following this news, the National Association of Realtors (NAR) Pending Home Sales index was up 0.3% in September after a 2.3% August decline. This measure of contracts signed on existing homes is up 14.5% over a year ago, posting the 17th month in a row of annual gains. The NAR's chief economist feels that this steady year-over-year increase "is pointing in the right direction." The FHFA index of prices for homes financed with conforming mortgages was up 0.7% in August, up 4.8% from a year ago, and up at an 8.9% annual rate the last 6 months.

BUSINESS TIP OF THE WEEK... Successful people are optimists, always seeing the cup half full. They keep a positive attitude and believe in their ability to achieve their goals.

 

>> Review of Last Week

 

OOPS, THEY DID IT AGAIN!... "They" are corporations reporting Q3 earnings. And just like the week before, those earnings on the whole failed to impress investors, who sent all three stock indexes down. With solid companies reporting basically negative revenue growth, Wall Street interpreted that as an indicator the global economy is slowing down. For the U.S. economy, the first estimate of Q3 GDP growth came in at a very modest 2.0% annual rate. The Fed policy statement added, "growth in employment has been slow, and the unemployment rate remains elevated."

Durable goods orders headed up 9.9% in September, bouncing back after their steep drop in August. But the Richmond Fed index, tracking mid-Atlantic manufacturers, dropped to–7 in October from +4 the prior month. Manufacturing reports have been mixed, reflecting halting growth in that sector. Initial jobless claims for the week came in at 369,000, down from the week before, but still a long way from the recovery economists are looking for. The week ended with Michigan Consumer Sentiment for October up from the month before.

For the week, theDow ended down 1.8%, to 13107; the S&P 500 was down 1.5%, to 1412; and the Nasdaq was down 0.6%, to 2988.

When stocks are under pressure, bond prices usually take off, but this week they were little changed. The FNMA 3.5% bond we watch ended the week up .04 at $106.12. Freddie Mac's Primary Mortgage Market Survey showed national average mortgage rates edging up during the week, but still near historic lows. Purchase loan demand was down slightly, but still up 7% from a year ago.

DID YOU KNOW?... There were 38,000 completed new homes for sale in September. This was the lowest level for that stat since the Census Bureau started tracking it in 1973.

 

>> This Week’s Forecast

 

INFLATION, MANUFACTURING, OCTOBER JOBS... The Fed's favorite inflation measure, Core PCE Prices,leads off the week. It excludes food and energy and is expected to remain within the central bank's guidelines. The Chicago PMI is forecast to come in just above 50 for the Midwest, the same as the overall ISM Index, indicating a slight expansion in manufacturing activity.

The October Employment Report caps off the week. Nonfarm payrolls are predicted not much higher than last month's, at 125,000. The unemployment rate is expected to inch back up to 7.9%, well above the level needed for a jobs recovery.

 

>> The Week’s Economic Indicator Calendar

 

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Oct 29 – Nov 2

Date Time (ET) Release For Consensus Prior Impact
M
Oct 29
08:30 Personal Income Sep 0.6% 0.1% Moderate
M
Oct 29
08:30 Personal Spending Sep 0.4% 0.5% HIGH
M
Oct 29
08:30 PCE Prices – Core Sep 0.1% 0.1% HIGH
Tu
Oct 30
10:00 Consumer Confidence Oct 72.5 70.3 Moderate
W
Oct 31
08:30 Employment Cost Index Q3 0.5% 0.5% HIGH
W
Oct 31
09:45 Chicago PMI Oct 50.4 49.7 HIGH
W
Oct 31
10:30 Crude Inventories 10/27 NA 5.896M Moderate
Th
Nov 1
08:30 Initial Unemployment Claims 10/27 375K 369K Moderate
Th
Nov 1
08:30 Continuing Unemployment Claims 10/20 3.249M 3.254M Moderate
Th
Nov 1
08:30 Productivity – Prelim. Q3 1.6% 2.2% Moderate
Th
Nov 1
10:00 ISM Manufacturing Index Oct 51.0 51.5 HIGH
F
Nov 2
08:30 Average Workweek Oct 34.5 34.5 HIGH
F
Nov 2
08:30 Hourly Earnings Oct 0.2% 0.3% HIGH
F
Nov 2
08:30 Nonfarm Payrolls Oct 125K 114K HIGH
F
Nov 2
08:30 Unemployment Rate Oct 7.9% 7.8% HIGH

>> Federal Reserve Watch

 

Forecasting Federal Reserve policy changes in coming months... At last week's meeting, the Fed did not touch the Funds Rate and confirmed they want to keep it at rock bottom until mid-2015. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on: Consensus
Dec 12 0%–0.25%
Jan 30 0%–0.25%
Mar 20 0%–0.25%

Probability of change from current policy:

After FOMC meeting on: Consensus
Dec 12 <1%
Jan 30 <1%
Mar 20 <1%
 

This e-mail is an advertisement for Ed Dorame. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is the property of Guarantee Home Mortgage and cannot be reproduced for any use without prior written consent. The material does not represent the opinion of Guarantee Home Mortgage. MLO-57774; WA License CL850501; Guarantee Home Mortgage dba of Golden Empire Mortgage, Inc. NMLS #2427.



  • Ed Dorame / Guarantee Home Mortgage
    555 Dayton St. #A-1
    Edmonds, WA 98020
    Phone: 2065102118
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