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Economic News
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Kenton Becker
Loan Officer
Office: (206) 423-2552
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NMLS #123961 ,
Washington #MLO-123961

Events Last Week:

Industrial Prod. Rose
Housing Starts Higher
Jobless Claims Up
Manufacturing Mixed

Events This Week:

Mon 4/22
Existing Sales

Tues 4/23
New Home Sales
2-yr Auction

Wed 4/24
Durable Orders
5-yr Auction

Fri 4/26
GDP

 

 

 

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Low Inflation, Moderate Growth

While it was rough last week for the stock market, mortgage markets were very quiet. The economic data contained no major surprises, and there was little change in mortgage rates during the week.

The economic news last week showed that inflation levels remain low. The most closely watched US inflation indicator revealed that March Core CPI inflation was just 1.9% higher than one year ago. In addition, China, the world's second largest economy, reported lower than expected first quarter GDP growth. China is an enormous source of demand for commodities, and gold, oil, and copper prices dropped sharply due to slowing growth in China. Declining commodity prices help keep inflation in check. Low inflation is always good news for mortgage rates. It is even more important right now because the Fed has announced that its MBS and Treasury purchase program will be scaled back or concluded if inflation is seen to be rising too rapidly. The Fed's program has been instrumental in keeping mortgage rates low.

The economic growth rate in the US is also very favorable for mortgage rates right now. Most signs point to steady growth at a modest rate this year. The Fed's Beige Book, released this week, reported moderate economic growth in most regions through early April. The Fed's Lacker stated that he sees the economy growing at a 2.0% annual rate this year, which is similar to the consensus view of Wall Street economists. Modest economic growth with low inflation is the sweet spot for mortgage rates.

Also Notable:
  • March Housing Starts rose to the highest level since June 2008
  • Copper prices declined to the lowest level in 1.5 years
  • Gold dropped below $1,400 per ounce, to the lowest level since February 2011
  • The Treasury will auction $99 billion in 2-yr, 5-yr, and 7-yr securities next week

graph

 
Average 30 yr fixed rate:
Last week: +0.02%
This week: -0.02%
Stocks (weekly):
Dow: 14,500 -300
NASDAQ: 3,200 -75
 

This Week

The biggest economic report this week will be Friday's release of first quarter GDP, the broadest measure of economic growth. Before that, Existing Home Sales will come out this week Monday and New Home Sales on Tuesday. Durable Orders, another important indicator of economic growth, will be released on Wednesday. Consumer Sentiment will round out the schedule. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

©2013 MBSQuoteline

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Equal Housing Opportunity Lender. Rates, Program, Fees, and Guidelines are subject to change without notice. Not a commitment to lend. Land Home only conducts business in states we are approved to. Land Home Financial Services, 22525 SE 64th Place, Suite 220, Issaquah, WA 98027. Washington Consumer Loan License #CL-89331. NMLS ID # 89331. Kenton Becker Licenses: NMLS #123961; Washington #MLO-123961. You are receiving this communication because of an existing and/or past business relationship, or because you have consented to receive communications from Land Home.  

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