Inside Lending - Week of May 12, 2014

Inside Lending - Week of May 12, 2014

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Inside Lending from Jena Flowers

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Jena Flowers

Jena Flowers
Sr. Mortgage Consultant
NMLS# 267246

5926 S. Fashion Pointe Drive #210
South Ogden, UT 84403
Mobile: 801-589-7788
Office: 801-479-9040
Fax: 801-479-9193

Intercap Lending, LLC

For the week of May 12, 2014 – Vol. 12, Issue 19

>> Market Update

QUOTE OF THE WEEK... "When you have exhausted all possibilities, remember this: you haven't." --Thomas Edison, American inventor and businessman

INFO THAT HITS US WHERE WE LIVE
... We certainly haven't exhausted all possibilities for the continued recovery of the housing market. A popular finance and economics blog recently pointed out what's right with real estate. For one thing, "new home sales are up significantly from the bottom, but are historically still low," so there's no place for them to go but up. The blog also pointed out that existing home inventory is increasing, a good thing because inventory has been so low. This is also slowing home price increases, another a positive sign pointing to a more normal market.

The National Association of Home builders chief economist opined: "we still expect housing to play a greater role in aiding the overall economic recovery this year. The job market continues to mend and that should spur a steady release of pent up demand among home buyers." Indeed, the Mortgage Bankers Association (MBA) reported demand for purchase loans up a seasonally adjusted 9% for the week ending May 2, as purchase applications outnumbered refinances for the first time since 2009. The MBA felt that likely reflected the impact of continued growth in the job market.

BUSINESS TIP OF THE WEEK... Imagine exactly what you want your life and work to look like. This will give you the energy and momentum you need to get there, keeping you focused on why you're making the effort. 

>> Review of Last Week

GOOD WEEK, SORT OF... From the evidence of the stock market indexes, Wall Street investors could only be characterized as cautiously optimistic. The optimism was shown by the fact the Dow Jones Industrial Average reached another record close, besting its prior high set April 30. The caution was demonstrated by the countervailing fact that the Nasdaq Composite registered its biggest weekly drop in a month, as tech issues and small-caps got dumped. The broadly based S&P 500 essentially flat-lined the week, finishing down by a slim 0.1%.

There weren't many economic reports or news items, but those that appeared mirrored the mood of investors. ISM Services for April showed continued growth in the economic sector that supports the most jobs. The March Trade Balance came in with a smaller than forecast deficit, which was good, but Preliminary Q1 Productivity dropped a worse than predicted –1.7%, not good. The Congressional Joint Economic Committee heard Fed Chair Janet Yellen suggest the economy remained on track for "solid growth." Yet she expressed concern about "the recent flattening out in housing activity," which others put to tough winter weather in much of the country.

The week ended with the Dow up 0.4%, to 16583; the S&P 500 down 0.1%, to 1878; and the Nasdaq down 1.3%, to 4072.


It was a mixed week in the bond market, with selling trimming prices in longer dated maturities. The 30YR FNMA 4.0% bond we watch finished the week down .75, at $104.28.
For the week ending May 8, national average 30-year fixed mortgage rates dropped again in Freddie Mac's Primary Mortgage Market Survey. This tracked the drop in the yields on 10-year Treasuries. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. 

DID YOU KNOW?... Fannie Mae's Chief Economist said the recent loss of momentum in the housing market is likely to be temporary: "Overall, we expect housing to add 0.3% to economic growth this year."

>> This Week’s Forecast

RETAIL GROWS SLOWER, INFLATION STILL TAME, HOME BUILDING EDGES UP... The closely watched Retail Sales report is forecast to show slower growth in April, but growth nonetheless. Inflation is expected to stay under control both with wholesale prices, measured by the April Producer Price Index (PPI), and consumer prices, reflected in the Consumer Price Index (CPI).

Home building should keep growing, with Housing Starts up in April. Manufacturing is predicted up for this month in the two regions measured by the New York Empire and Philadelphia Fed indexes.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of May 12 – May 16

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

M
May 12

14:00

Federal Budget

Apr

+$114.0B

+$112.9B

Moderate

Tu
May 13

08:30

Retail Sales

Apr

0.3%

1.2%

HIGH

Tu
May 13

10:00

Business Inventories

Mar

0.4%

0.4%

Moderate

W
May 14

08:30

Producer Price Index (PPI)

Apr

0.2%

0.5%

Moderate

W
May 14

08:30

Core PPI

Apr

0.2%

0.6%

Moderate

W
May 14

10:30

Crude Inventories

5/10

NA

–1.781M

Moderate

Th
May 15

08:30

Initial Unemployment Claims

5/10

325K

319K

Moderate

Th
May 15

08:30

Continuing Unemployment Claims

5/3

2.700M

2.685M

Moderate

Th
May 15

08:30

Consumer Price Index (CPI)

Apr

0.3%

0.2%

HIGH

Th
May 15

08:30

Core CPI

Apr

0.2%

0.2%

HIGH

Th
May 15

08:30

NY Empire Manufacturing Index

May

4.8

1.3

Moderate

Th
May 15

09:15

Industrial Production

Apr

0.1%

0.7%

Moderate

Th
May 15

09:15

Capacity Utilization

Apr

79.2%

79.2%

Moderate

Th
May 15

10:00

Philadelphia Fed Index

May

9.1

16.6

HIGH

F
May 16

08:30

Housing Starts

Apr

975K

946K

Moderate

F
May 16

08:30

Building Permits

Apr

1000K

990K

Moderate

F
May 16

09:55

U. of Michigan Consumer Sentiment Index

May

84.5

84.1

Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months... Economists by and large believe the Fed will keep the Funds Rate at its super low level well into next year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:

Consensus

Jun 18

0%–0.25%

Jul 30

0%–0.25%

Sep 17

0%–0.25%


Probability of change from current policy:

After FOMC meeting on:

Consensus

Jun 18

     <1%

Jul 30

     <1%

Sep 17

     <1%

 

 

This e-mail is an advertisement for Jena Flowers. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in this message is the property of Intercap Lending, LLC and cannot be reproduced for any use without prior written consent. This message is intended for business professionals only and is not intended for distribution to consumers or other third parties. The material does not represent the opinion of Intercap Lending, LLC.


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