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Last Week in Review: The
Jobs Report for November was released. What did the data show, and how did
home loan rates react?
Forecast for the Week: Look for important news on inflation and
retail sales. Plus the Fed meets.
View: Many people have a fear of public speaking. Be sure to share
these simple tips with your clients, colleagues, and referral partners.
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"Life
is a mixed blessing, which we vainly try to unmix." Author and journalist Mignon
McLaughlin. And the Jobs Report for
November turned out to have some mixed data, though un-mixing the numbers
is important for us to do. Read on for the details and the latest news on
home loan rates.
On
Friday the Labor Department reported that employers added 146,000 new jobs
in November, well above the 90,000 that was expected. In addition, the
Unemployment Rate hit 7.7%, the lowest level since December of 2008. On the
surface, both of these figures seem like a positive sign for the labor
market.
But it is also important to understand that the decrease in the
Unemployment Rate was due in part to 350,000 people dropping out of the
workforce. And that's why the Labor Force Participation Rate (LFPR) fell to
63.6%, the lowest reading in over 31 years. The LFPR calculation is quite
simple. If you are 16 years old and not in the military, then you either
have a job or you don't. The ratio of people "participating" or
working is then compared to the total population. In addition, the biggest
increase in jobs was seen in the retail sector, which was probably due to
seasonal holiday hiring.
So what does this mean for home loan rates? Bonds and home
loan rates worsened slightly last week, in part due to the positive
headline numbers from the Jobs Report. But there is still much uncertainty
in the markets, both here due to the ongoing Fiscal Cliff saga and the
continued uncertainty in Europe. This means that investors will likely
continue to see our Bond market as a safe haven for their money. And since
home loan rates are tied to Mortgage Bonds, this continued uncertainty
could benefit home loan rates as well.
The bottom line is that home loan rates remain near historic lows,
making now a great time to consider a home purchase or refinance. Let me
know if I can answer any questions at all for you or your clients.
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Chart: Fannie Mae 3.0% Mortgage Bond (Friday Dec 07, 2012)
The
second half of the week heats up with several important reports.
- Economic data doesn't begin until Thursday with Weekly
Initial Jobless Claims. Claims have been moving lower the past few
weeks after the big spike higher in November due to Superstorm Sandy.
- Retail Sales
will also be delivered on Thursday.
- A double dose of inflation news ends the week, with
the wholesale-measuring Producer Price Index on Thursday, followed
by the Consumer Price Index on Friday.
In addition, the last
Federal Open Market Committee meeting for 2012 will be held on Tuesday and
Wednesday, and that always has the potential to move the markets.
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. The chart below shows
Mortgage Backed Securities (MBS), which are the type of Bond that home loan
rates are based on.
When you see these Bond prices moving higher, it means home loan
rates are improving – and when they 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 were 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, Bonds and home loan rates reacted
negatively to the better than expected Jobs Report for November. But home
loan rates remain near historic lows and I will continue to monitor their
movement closely.
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The Mortgage
Market Guide View...
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Easy
Presentation Tips
For many people, public speaking is one of their greatest
fears. And the task of speaking to groups large and small can seem
daunting! What if you deluge people with too much information, give them
too many options, talk too much, bore them, or speak in jargon they don't
understand?
The good news is that there are some simple tips that can help make any
presentation shine:
Give the big picture. People love stories, so use ones that
illustrate how your ideas fit together. This will help people visualize and,
more importantly, relate to what you're telling them. Stories will also
help people relate to and connect with you, helping you build
rapport in the process.
Short is sweet. Don't spend too much time getting to the point. As
Winston Churchill once said, "The head cannot take in more than the
seat can endure."
Tell them what you want them to do. Most salespeople know how to ask
for the sale, but often forget to ask for everything else. If you want
agreement, ask for it. If you need information, ask for it. And most
important of all, say "thank you" when you get it!
Be conversational. The fastest way to lose people is
corporate-speak, jargon, or using big words when small ones will do.
Whenever you are presenting, just imagine yourself sitting next to someone
you are comfortable with for a friendly chat.
Economic
Calendar for the Week of December 10 - December 14
Date
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ET
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Economic Report
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For
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Estimate
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Actual
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Prior
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Impact
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Wed. December 12
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12:30
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FOMC Meeting
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Dec
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NA
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0.25%
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HIGH
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Thu. December 13
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08:30
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Jobless Claims
(Initial)
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12/8
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375K
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370K
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Moderate
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Thu. December 13
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08:30
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Retail Sales
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Nov
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0.4%
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-0.3%
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HIGH
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Thu. December 13
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08:30
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Retail Sales
ex-auto
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Nov
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0.0%
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0.0%
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HIGH
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Thu. December 13
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08:30
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Producer Price
Index (PPI)
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Nov
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-0.5%
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-0.2%
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Moderate
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Thu. December 13
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08:30
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Core Producer
Price Index (PPI)
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Nov
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0.1%
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-0.2%
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Moderate
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Fri. December 14
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08:30
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Consumer Price
Index (CPI)
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Nov
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-0.2%
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0.1%
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HIGH
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Fri. December 14
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08:30
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Core Consumer
Price Index (CPI)
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Nov
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0.1%
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0.2%
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HIGH
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As your mortgage
professional, I am sending you the MMG WEEKLY because I am committed
to keeping you updated on the economic events that impact interest rates
and how they may affect you.
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