Wednesday, January 30, 2013

Weekly Economic Summary from Bank of America 1-30-2013

Last Week in Review


Table Source: Mortgage Success Source

Last week, the Federal Housing Finance Agency (FHFA) reported that home prices rose by 0.6% in November from October, and that they are up 5.6% from the calendar year that ended in November. These numbers are based on data received from Fannie Mae or Freddie Mac mortgages. In addition, both Existing Sales and New Home Sales for December, though below estimates, were strong numbers for 2012.
But the housing market wasn’t the only area where we saw positive economic data last week. There was good economic news out of Germany, plus several companies here reported strong earnings, including Procter & Gamble and Honeywell. In addition, weekly Initial Jobless Claims dropped by 5,000 to 330,000 in the latest survey. This is the lowest level since January of 2008. It is important to note that estimates were used for three states, including Virginia and California, so the numbers could be distorted.
How were home loan rates impacted? The mix of good economic news last week caused investors to move their money out of bonds, which are considered safer investments, and into stocks in the hopes of taking advantage of gains. And since home loan rates are tied to mortgage bonds, as bonds worsened last week, so did home loan rates. But rates remain close to historic lows, and now is still a great time to consider a home purchase or refinance.

Forecast for the week

A slate of economic reports is ahead, with several key data points that could move the markets.
  • Thursday brings several key economic reports, including Initial Jobless Claims, Chicago PMI, Personal Income and Spending, and the inflation-reading Core Personal Consumption Expenditure, the Fed’s favorite measure of inflation.
  • We’ll get a sense of how the consumer is feeling with the Consumer Sentiment Index on Friday.
  • Rounding out the week, the all-important Non-Farm Payrolls will be reported along with the Unemployment Rate. Also on Friday, the ISM Manufacturing Index will be delivered.
In addition, the Federal Reserve will meet for its two-day meeting of the Federal Open Market Committee, with the monetary policy statement released at 2:15pm ET today. The statement will be dissected for any hints on the current purchase programs of mortgage backed and Treasury securities. If there is any talk of halting the programs this year, it could lead to lower bond prices and a push higher in home loan rates.
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.
As you can see in the chart below and as mentioned above, Initial Jobless Claims came in at their lowest level since January of 2008 (though estimates were used for three states, which could have skewed the numbers).

Chart: Initial Jobless Claims

Table Source: Mortgage Success Source

In the news this week (January 28 - February 1, 2013)


Table Source: Mortgage Success Source






Author Bio: Rob Alley earned a bachelors degree at Virginia Tech, in Blacksburg, VA in Biology. Rob Alley has been licensed for 6 years, he and his team of 4 agents consults with homeowners regarding Real Estate transactions and speciliazes in listing and selling Central Virginia Real Estate - Charlottesville, Louisa, Orange, Lynchburg, Nelson, Fluvanna, Amherst, Bedford, Campbell, Waynesboro and Augusta. Realtor/Owner of Virginia Real Estate Solutions at RE/MAX Assured Properties
Charlottesville Real Estate Experts

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