In This Issue

Last Week in Review: The Jobs Report for September is in...was it full of good  surprises or bad ones? Forecast for the Week: A holiday-shortened week is ahead, with two important reports coming on Friday. View: Stress is no laughing matter...or is it? Read on to find the answer.

Last Week in Review

People say that “life is full of surprises.” And indeed, last week’s Jobs Report contained several surprises. Read on to find out if they were good or bad...and what they meant for home loan rates. Overall,  the Jobs  Report wasn’t great, but  it did surprise by being  better than  anticipated.  One thing  that wasn’t a surprise was the  unemployment  rate which held  steady at  9.1%. But the  headline number came in at 103,000 jobs created, which was better than expectations of 60,000 and  even higher than some of the more frothy expectations. In addition, 137,000 jobs were created in the private sector, which offset more government job losses and which was a lot better than the 83,000 private job gains expected.  Another surprise in the report was the significant upward revisions, which added 99,000 jobs to what was previously reported in prior months, and this added  to the positive tone of the report. These upward revisions really change a very  pessimistic jobs picture to something a bit more optimistic. For instance, last month  the Jobs Report showed zero job creations and now that figure has been  revised to show 57,000 jobs created. Once again, these aren't great numbers—but  they are better than bad, and they tell us that the economy is not in a recession…at  least for now. So, what did all of this mean for home loan rates? It’s important to remember that when our economy is struggling, our Bond Market usually benefits as investors  seek a safe haven for their money. And since home loan rates are tied to  Mortgage Bonds, our home loan rates are sometimes at their best when our  economy is struggling. In a way it makes sense...in times of economic struggle, good home loan rates can help kick start our economy in other areas.  Yet, when good or better than expected economic news hits the wires, like it did  with Friday’s Jobs Report, investors often move their money out of Bonds and into  Stocks in an attempt to take advantage of these gains. And that’s a big reason  why we saw Bonds and home loan rates worsen late last week. The most important thing to remember is that now is still a great time to  purchase or refinance a home, as home loan rates remain near historic lows.   Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Oct 07, 2011) There aren’t a lot of economic reports in this holiday-shortened week, with the Bond Market closed Monday for Columbus Day (Stocks are open for a regular session). Be sure to look for: On Tuesday, the Meeting Minutes from the September Federal Open Market Committee (FOMC) meeting will be released and it could garner some attention.  The usual weekly Initial Jobless Claims report will be released on Thursday. Last week’s initial jobless claims crept back up to just above 400,000 so it will be important to see which way this week’s numbers move. Investors will also be focusing in on the Retail Sales report for September, which is due out on Friday. Last Thursday it was reported that September sales for retailers, which is a separate report, were solid—showing a 5.1% year-over-year gain from the 23 largest retailers due to back-to-school sales.  Also on Friday is the Consumer Sentiment Index, so we’ll get an idea about how consumers are feeling about the economy. 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 worsened last week due to several factors. I’ll be keeping a close eye on which way they move this week.

The Mortgage Market Guide View...

Anxiety and Stress Are No Match for a Good Laugh Whether you’re stressed about a deal at work, anxious about an upcoming meeting with a client, or just feeling under the weather, laughter can be the best medicine. But why? What really happens that makes laughing so beneficial? Doctors and scientists have some ideas about the benefits of laugher: Stress—There’s actually a physical reason that laughter reduces stress. In addition to being a great emotional release, laughter reduces the number of stress hormones (such as cortisol and epinephrine) in your body and helps boost good hormones like endorphins. Blood Flow—Scientists have found that blood vessels function healthily when people watch comedies, which means they expand and contract more easily and help blood flow normally. This is in stark contrast to the tightened blood vessels that were found in people after watching a drama. In short, laughter improves blood flow, which helps prevent heart attack and heart disease. Cholesterol Levels—Recently, researchers have found that people with Type 2 Diabetes who watched funny videos for at least 30 minutes each day had better “good cholesterol” levels after just two months. Heart and Abs—It turns out that laughing is a lot like exercising. A good laugh can increase your heart rate, exercise your diaphragm, and even contract your stomach muscles. Calories—With the similarities between laughter and exercise, it shouldn’t come as a surprise that laughing helps you burn calories. In fact, one study found that 50 calories are burned in 10 to 15 minutes of laughter. Immune System—There’s also evidence that laughter helps boost antibodies, making your system better prepared to fight viruses. So, a little laughter not only makes you feel better in the short term, but also can help you remain healthier in the long term. In addition to all of these physical reactions and benefits, laughing is beneficial for your mental health too. It’s a great anti-depressant… not to mention a great way to interact with friends, family, and even clients while you strengthen your social relationships. Economic Calendar for the Week of October 10 - October 14 Date ET Economic Report For Estimate Actual Prior Impact Tue. October 11 02:00 FOMC Minutes Sept NA NA HIGH Thu. October 13 08:30 Jobless Claims (Initial) 10/8 406K 401K Moderate Thu. October 13 08:30 Balance of Trade Aug -$46.1B -$44.8B Moderate Fri. October 14 08:30 Retail Sales Sept 0.6% 0.0% HIGH Fri. October 14 08:30 Retail Sales ex-auto Sept 0.3% 0.1% HIGH Fri. October 14 10:00 Consumer Sentiment Index (UoM) Oct 60.0 59.4 Moderate

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