Uncertainty Remains at Home and Abroad

In This Issue

Last Week in Review: The economic report calendar was quiet, but there was still plenty of news to move the markets. Forecast for the Week: A full slate of economic reports is ahead, with news on consumer sentiment and spending, inflation, manufacturing and housing. View: Interruptions at work can hinder productivity, maybe even more than you think. Check out these tips below and be sure to share them with colleagues, clients, friends and family.

Last Week in Review

All's quiet on the economic report front. And while there was little economic report news during the first full week of January, the markets still had plenty of other news to digest. Read on for details. The only economic report to note last week was Thursday's Weekly Initial Jobless Claims Report. Initial Jobless Claims rose by 4,000 in the latest week to 371,000. This was above expectations and the highest number in a month. While the recently released Jobs Report for December showed that the labor market is continuing to improve, though at an anemic pace, it's also important that we see these weekly initial jobless claims numbers continue to decline. Also in the news last week, Fannie Mae reported that its national housing survey showed that 43% of those consumers polled feel that home prices will rise in 2013. However, 20% said that their financial situations will deteriorate this year due to the debt ceiling worries and the rise in taxes. And in news overseas, European Central Bank President Mario Draghi said that he sees further risks to the region's economic outlook. So what does this mean for home loan rates? Stocks did reach five-year highs last week--at the expense of Bonds and home loan rates--after the Fiscal Cliff deal was reached and investors felt that the pace of economic growth would increase due to the deal passing. However, uncertainty both here at home (due to the debt ceiling worries) and overseas (due to the continuing debt crisis in Europe) means that investors will likely continue to see our Bond market as a safe haven for their money. This could ultimately benefit Bonds--and home loan rates, which are tied to Mortgage Bonds--in the process. The bottom line is that home loan rates remain near historic lows, meaning now is 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.

Forecast for the Week

Chart: Fannie Mae 3.0% Mortgage Bond (Friday Jan 11, 2013) After last week's quiet economic report calendar, this week's calendar heats up. Retail Sales will be released on Tuesday and investors will look to see if consumers opened their wallets during the holiday shopping season. We'll get a double dose of inflation news this week, with the wholesale-measuring Producer Price Index on Tuesday and the Consumer Price Index on Wednesday. Housing Starts and Building Permits will be reported on Thursday along with Weekly Initial Jobless Claims. We'll also see a double dose of manufacturing news, with the Empire State Index on Tuesday and the Philly Fed Index released on Thursday. To close out the week, the Consumer Sentiment Report will be released on Friday. 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 worsened last week as Stocks hit five-year highs. But home loan rates remain near historic lows and I'll be watching closely to see what happens this week.

The Mortgage Market Guide View...

Pardon the Intrusion The High Cost of Office Interruptions Getting into that peak state of performance some people call "flow"--where ideas come easy and productivity seemingly doubles, or triples if you're lucky--is an elusive state for many office workers. Basex, a research and advisory firm, estimated the cost of workplace interruptions such as unscheduled calls, emails, and instant messaging at around $588 billion per year in lost productivity for the U.S. economy. And that's not all. New York Times bestseller Brain Rules, written by developmental molecular biologist Dr. John Medina, points out... A task that's interrupted takes 50% longer and has 50% more mistakes than an uninterrupted one On average, an interrupted worker takes 23 minutes to get back to the original task, and an additional 30 minutes to return to the "flow" state 80% of the time workers will return to an interrupted task later in the day; in 1 out of 5 occurrences, however, they will not be able to return to it the same day Frequent task changes without completion significantly increases stress levels as opposed to handling things to completion one at a time The bottom line is interruptions not only hurt your productivity but may also harm your health. Try to limit interruptions during your day as much as possible by: Checking email or taking calls only during certain times of the day Keeping your door closed Wearing headphones (even if nothing is playing) Making sure every staff member knows the true cost of their interruptions And the next time you want to interrupt someone else, remember that your 30 second request may easily become an hour of extra work--not to mention additional mistakes that take even more time to correct later on. Economic Calendar for the Week of January 14 - January 18 Date ET Economic Report For Estimate Actual Prior Impact Tue. January 15 08:30 Retail Sales Dec 0.2% 0.3% HIGH Tue. January 15 08:30 Retail Sales ex-auto Dec 0.3% 0.0% HIGH Tue. January 15 08:30 Producer Price Index (PPI) Dec 0.0% -0.8% Moderate Tue. January 15 08:30 Core Producer Price Index (PPI) Dec 0.2% 0.1% Moderate Tue. January 15 08:30 Empire State Index Jan 2.0 -8.1 Moderate Wed. January 16 08:30 Beige Book Jan NA NA Moderate Wed. January 16 08:30 Core Consumer Price Index (CPI) Dec 0.1% 0.1% HIGH Wed. January 16 08:30 Consumer Price Index (CPI) Dec 0.0% -0.3% HIGH Thu. January 17 08:30 Jobless Claims (Initial) 1/12 370K 371K Moderate Thu. January 17 08:30 Building Permits Dec 905K 899K Moderate Thu. January 17 08:30 Housing Starts Dec 889K 861K Moderate Thu. January 17 10:00 Philadelphia Fed Index Jan 5.2 4.6 HIGH Fri. January 18 10:00 Consumer Sentiment Index (UoM) Jan 75.0 72.9 Moderate

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