For the week of Apr 02, 2022 — Vol. 16, Issue 14
In This Issue
Last Week in Review: GDP edged lower in fourth quarter 2017, while inflation remained tame in February.
Forecast for the Week: All eyes will be on Friday’s release of the Jobs Report for March.
View: Protect your productivity from unnecessary meetings with these tips.
Last Week in Review
“You make me wanna (Shout!)” The Isley Brothers. The lack of homes for sale on the market may be causing some would-be buyers to shout these days. But what about the rest of the week’s news?
Fourth quarter 2017 Gross Domestic Product (GDP) edged lower to 2.9 percent, down from 3.2 percent in the third quarter, the Bureau of Economic Analysis reported. However, the report showed that consumer spending rose 4.0 percent, up from 2.2 percent in the third quarter. The jump in consumer spending was the quickest pace since the fourth quarter of 2021. Consumer spending makes up two-thirds of economic activity and is a key driver of economic growth.
Home prices continued to rise in January due in part to the low amount of homes for sale on the markets. The S&P/Case-Shiller 20-City Home Price Index rose 6.4 percent from January 2017 to January 2018, up from 6.3 percent recorded from December 2016 to December 2017. Home prices were also up 0.8 percent from December to January. Inventory continues to be a real challenge for many would-be buyers. Currently, there is a 3.4-month supply of homes for sale, well below the 6-month supply that is seen in a healthy market.
Consumer inflation remained low in February. The Bureau of Economic Analysis reported that Personal Consumption Expenditures (PCE) and Core PCE rose 0.2 percent from January to February, both in line with estimates. The more closely watched Core PCE reading excludes volatile food and energy prices and February’s figure was just below the 0.3 percent recorded in January. From February 2017 to February 2018, Core PCE came in at 1.6 percent, just above the 1.5 percent recorded in January. However, the reading is still well below the Fed’s target range of 2 percent.
When inflation starts to rise, a rise in home loan rates can follow. Inflation reduces the value of fixed investments like Mortgage Bonds, and home loan rates are tied to Mortgage Bonds.
For now, home loan rates remain attractive and near historically low levels.
If you or someone you know has any questions about home loans, please reach out. I’d be happy to help.
Forecast for the Week
The labor sector will be front and center as the Jobs Report for March could be a market mover.
- Manufacturing data from the ISM Index will be released Monday with the ISM Services Index reported on Wednesday.
- The first of two key labor market reports will be delivered Wednesday from the ADP National Employment Report.
- Look for weekly Initial Jobless Claims on Thursday.
- On Friday, the Jobs Report for March will be released, which includes Non-Farm Payrolls, the Unemployment Rate and Hourly Earnings.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.
When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.
To go one step further, a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.
As you can see in the chart below, Mortgage Bonds were able to move higher in recent days. Home loan rates remain near historic lows.
Chart: Fannie Mae 4.0% Mortgage Bond (Friday Mar 30, 2018)
The Mortgage Market Guide View…
Vetting Meeting Requests
Meetings are a regular part of the work day and do serve many important purposes. But sometimes, too many meetings can put a damper on your productivity. The following scripts can help you vet meeting invites and suggest alternatives where appropriate.
When the purpose of the meeting isn’t clear in the invite, don’t be afraid to ask for more details. For instance, you could say, “I want to make sure I’m fully prepared. Can you let me know how you need me to contribute or what information you need me to share?” If there is no definitive reason for your presence, ask the requestor if meeting minutes, an update via email or a short phone call will suffice in place of your attendance.
When you’re in the middle of a tight deadline. If attending will cut into a specific schedule or project, be sure to communicate that information. Just explain: “I am currently working through Project A to ensure it is completed by the deadline. Do you think it’s worth it for me to take time away to attend this meeting on Project B? If so, I’ll be there.”
When you want to attend but you have limited time. Many meetings are scheduled for longer than necessary because settings in Outlook and other schedulers default to 30 minutes or an hour. But these can be changed to any length of time. Ask to reduce the default meeting time or let the organizer know ahead of time you’re only available for part of the meeting.
These tips can help ensure your participation in meetings is essential as well as effective.