|For the week of Jan 18, 2010 — Vol. 8, Issue 3
|Last Week in Review|
|“WHAT DO WE LIVE FOR, IF IT IS NOT TO MAKE LIFE LESS DIFFICULT FOR EACH OTHER?” George Eliot. The current crisis in Haiti certainly puts this sentiment into perspective. For information on how you can help, see the View article below.
Last week it was reported that the inflation measuring Consumer Price Index (CPI) for December came in lower than expected. Overall, CPI for all of 2009 was fairly tame. But as you can see in the chart below, the closely watched Core CPI, which strips out volatile food and energy, rose to 1.8% year-over-year in December after hitting a multi-year low of 1.4% in August.
Chart: Core Consumer Price Index
So what does this mean for Bonds and home loan rates?
|Forecast for the Week|
|The markets will be closed on Monday in observance of the Martin Luther King, Jr. holiday, but plenty of news will follow later in the week. Wednesday brings more news from the inflation front, with the Producer Price Index (PPI) Report, which measures inflation at the wholesale level. Wednesday will also bring a read on the housing market, with the Housing Starts and Building Permits Report.
There’s also more manufacturing news ahead on Thursday with the Philadelphia Fed Report. Also in store for Thursday is another look at the weekly Initial Jobless Claims Report…so it’s sure to be an interesting week, with a variety of data for the markets to absorb.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
As you can see in the chart below, Bonds and home loan rates improved last week, largely due to tame inflation numbers and a decline in Stocks. In fact, Bonds were actually able to power through a tough technical “ceiling of resistance” at the 200-day Moving Average…but it remains to be seen if they will hold their gains. I’ll be watching closely to see if Bonds and home loan rates can build on their positive momentum in the coming week.
Chart: Fannie Mae 4.5% Mortgage Bond (Friday Jan 15, 2010)
|The Mortgage Market View…|
|A Helping Hand for Haiti
The catastrophe in Haiti cries out for all of us to do whatever we can to help. But many of us aren’t sure exactly how to help or which organization to entrust with a donation.
To help you make sure your donation makes as big a difference as possible, consider donating to AmeriCares, which is one of the many fine organizations helping Haiti through disaster relief. AmeriCares is in the business of disaster relief and has an extensive network on the ground in Haiti, so your money will go to get supplies directly to those stricken instead of setting up infrastructure. You can learn more about them and donate at http://www.americares.org.
Obviously, the current economy presents challenges for many of us, but if you are able to help, your donation will go a long way. Whether it is through AmeriCares, or some other organization of your choice, any assistance you provide can help ease the suffering of those in need.
|The Week’s Economic Indicator Calendar|
|Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
Economic Calendar for the Week of January 18 – January 22
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