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Last Week in Review: Surprising
jobs news for February, plus more good news on the housing front.
Forecast for the Week: Several key reports will be released in the
second half of the week, including inflation and retail sales. Plus, will
Stocks reach another record?
View: Want more attention from your marketplace? Be sure to read the
tips below.
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It's
been said 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.
The
Jobs Report for February showed that 236,000 jobs were created, well above
the 165,000 that was expected. In addition, private employers added 246,000
new jobs in February, also well above expectations. While this is good
news, it's important to note that job creations in January were revised
downward to 119,000 from the previous reading of 157,000.
There was more good news in the report: the Unemployment Rate fell to 7.7%
from 7.9%, a four-year low. However, the downtick in the unemployment rate
was due to more people leaving the labor force. And the Labor Force
Participation Rate (LFPR) continues to decrease, coming in at its lowest
level since September 1981. 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.
All in all, the Jobs Report showed that the labor market is slowly
improving. And there was more evidence that the housing market continues to
improve. Research firm CoreLogic reported that home prices rose 0.7% from
December to January and surged nearly 10% compared to a year ago. The 10%
increase was the largest yearly increase since April 2006 and was the
eleventh monthly increase in a row. Though not all the economic news was
rosy: Worker Productivity in the 4th quarter of 2012 slowed to its slowest
pace in four years. This coincides with the slow growth that was recently
reported in the Gross Domestic Product reading for the same period.
What does all of this mean for home loan rates? The good economic
news has caused investors to move money out of Bonds and into riskier
assets like Stocks, to try to take advantage of gains. As a result, Stocks
reached record highs last week, at the expense of Bonds. However, the Fed
continues purchasing $85 billion in Bonds every month as part of their Bond
purchase program known as Quantitative Easing. Plus, there is also
continued uncertainty out of Europe, meaning some investors will likely
continue their safe haven trade into our Bond Market. Overall, this should
help keep Mortgage Bonds--and therefore home loan rates, which are tied to
Mortgage Bonds--near record best levels.
The bottom line is that now remains a great time to consider a home
purchase or refinance, as home loan rates remain near historic lows. 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 Mar 08, 2013)
The
second half of the week heats up with several key reports.
- Economic reports kick off on Wednesday with Retail
Sales.
- As usual, Thursday brings Weekly Initial Jobless
Claims, as well as the wholesale-measuring Producer Price Index,
the first of the week's inflation reports.
- There's more inflation news on Friday with the Consumer
Price Index. Also look for Empire Manufacturing and Consumer
Sentiment to conclude the week.
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 worsened last week as Stocks hit
record highs. But Bonds and home loan rates remain near record best levels
and I will continue to watch their movement closely.
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The Mortgage
Market Guide View...
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New
Report Says Blogs More Influential than Facebook, Twitter
Have you been wondering how to get more attention from your
marketplace? Are you trying to find new ways to bring in more business?
Well, if you haven't already started blogging, you may want to give it
another look.
Technorati Media, one of the largest social media ad networks, recently
released their 2013 Digital Influence Report--a survey including over
6,000 influencers, 1,200 consumers and 150 other top marketers--revealing
when it comes to making purchase decisions, blogs are the third most
influential resource (31 percent!), second only to retail and brand sites.
The survey participants said blogs rank higher than Twitter for shaping
their opinions and higher than Facebook for motivating purchasing
decisions. The reason? Bloggers tend to be more honest with their opinions
and are perceived as less self-serving than other sources.
Here are four ways to be influential with your online community:
Be honest. People turn to blogs because they want honest opinions
and professional advice. Don't be afraid to be yourself or use some
personality both with your topics and your writing style.
Focus on providing value. Building strong relationships with your
followers is easy when you provide great value for them. Relationships are
really a by-product of providing great content and a sense of community.
Be the go-to. Becoming a local guru is neither difficult nor
undesirable. If you can establish yourself as a trusted source of
information, people will follow you for your specific advice...and so will
the business.
Get synergy. Don't ignore Facebook or Twitter, but don't rely on
them for the full job. When you provide compelling content on your blog,
use social media to amplify the content. The key to influencing your
customers on Facebook is to share things that generate likes, comments, and
interaction. Blog posts are a great way to do just that!
Economic
Calendar for the Week of March 11 - March 15
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. March 13
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08:30
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Retail Sales
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Feb
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NA
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0.1%
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HIGH
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Wed. March 13
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08:30
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Retail Sales
ex-auto
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Feb
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NA
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0.2%
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HIGH
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Thu. March 14
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08:30
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Jobless Claims
(Initial)
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3/09
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NA
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NA
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Moderate
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Thu. March 14
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08:30
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Producer Price
Index (PPI)
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Feb
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NA
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0.2%
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Moderate
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Thu. March 14
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08:30
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Core Producer
Price Index (PPI)
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Feb
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NA
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0.2%
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Moderate
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Fri. March 15
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08:30
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Consumer Price
Index (CPI)
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Feb
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NA
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0.0%
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HIGH
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Fri. March 15
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08:30
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Core Consumer
Price Index (CPI)
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Feb
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NA
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0.3%
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HIGH
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Fri. March 15
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08:30
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Empire State
Index
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Mar
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NA
|
|
10.0
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Moderate
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Fri. March 15
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10:00
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Consumer
Sentiment Index (UoM)
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Mar
|
NA
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|
77.6
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Moderate
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The material
contained in this newsletter is provided by a third party to real estate,
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completeness and as a result, there is no guarantee it is without errors.
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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