inflation

What The Price Of Gold Says About The Economy

September 13, 2007

Headlines today read that the value of gold is nearing its all-time high (adjusted for inflation).  The lay people would ignore this story, but those in the know understand that the price of gold is usually reflective of the state of the global economy. The spot price of gold tells a lot about investor psyche […]

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The Week In Review (September 10, 2007) : What To Watch For

September 10, 2007

Weak employment data pushed mortgage rates lower last week.  Against expectations of 110,000 new jobs created in August, last Friday’s Non-Farm Payrolls report showed a loss of 4,000 jobs. The story made headlines all over the country this weekend but its connection to mortgage rates is not always clear.  Here’s how the jobs report relates […]

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The Week In Review (September 4, 2007) : What To Watch For

September 4, 2007

Federal Reserve Chairman Ben Bernanke took the pulpit Friday in Jackson Hole but his remarks made little impact on mortgage bond trading. The Fed is aware of economic issues related to housing and mortgage debt, Bernanke said. He implied that the Fed wants more evidence that inflation has slowed before taking more drastic measures to help […]

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The Fed Descends On Jackson Hole, The Market Won’t Get What It’s Looking For

August 31, 2007

Today is a holiday-shortened session but that doesn’t mean that the markets will be on vacation. The day’s big event is Federal Reserve Chairman Ben Bernanke’s speech at the Fed’s annual symposium in Jackson Hole, WY. Investors will dissect every phrase looking for clues about the economy and housing. More importantly, markets want some advance […]

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How Credit Cards May Be Replacing Home Equity As A Funding Source

August 29, 2007

As mortgage guidelines loosened between 2002 and 2006, homeowners often used their home equity to retire credit card and other consumer debt.  They did this by increasing the size of the mortgage and taking “cash out” from their home. As you’d expect, this type of mortgage transaction is called a “cash out” refinance. Well, now […]

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The Week In Review (August 27, 2007) : What To Watch For

August 27, 2007

This week is data-heavy so markets will finally get to focus on fundamentals instead of fear. For the past two weeks, uncertainty about the economy has led to psychologically-driven mortgage interest rate movements. Rising defaults devalue mortgage holdings and many investors are now expecting the defaults levels to rise even more. When defaults exceed expectations, […]

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Like The Fed Funds Rate, The Fed’s Discount Rate Does Not Control Mortgage Rates

August 21, 2007

Friday, the Federal Reserve lowered its Discount Rate by 0.50% in an effort to preserve liquidity among our nation’s banks. This has nothing to do with mortgage rates that people like you and I get for our homes.  Well, not directly at least. The Discount Rate is the rate at which banks borrow money from the […]

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The Week In Review (August 20, 2007) : What To Watch For

August 20, 2007

Again last week, financiers failed to answer the major question dogging Wall Street: What is the “right” risk model to use for mortgage lending?  The models of the past are being proven to have been wrong. So, why do risk models matter? Because the basic tenet of lending states that the riskier the loan, the […]

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The Week In Review (August 13, 2007) : What To Watch For

August 13, 2007

After all the volatility and talk of a global crumble, all of the major U.S. stock indices posts gains last week.  It just goes to show you what a strange roller coaster ride we’re all on. Last week, the market bounced its way through: The Fed’s press release stating that inflation is still a concern […]

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Awaiting The Fed’s Next Statement

August 7, 2007

The stock market bounced back yesterday from Friday’s losses, adding 287 points.  There wasn’t much activity in mortgage rates, though, which remained relatively flat. Right now, it’s all eyes on the Federal Open Market Committee and their 2:15 P.M. ET press release. For as many people that want the Fed to make a powerful statement about […]

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How Ben Bernanke’s Testimony To Congress Is Moving Mortgage Rates

July 18, 2007

Despite lower prices at the gas pump, the Consumer Price Index increased a little bit more than expected in June. According to the Bureau of Labor Statistics, CPI rose 0.2% versus the 0.1% expected by economists CPI tries to answer the question “How expensive is everyday life?”.  Over the last 12 months, says the government, “life” […]

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When Everyone Spends A Little Less, We All Save A Little More

July 13, 2007

Weakness in Retail Sales data this morning is causing a knee-jerk reaction in trading circles, edging mortgage rates lower this morning. Against expectations of a flat reading, retailers reported a 0.9% decrease in sales volume in June.  This is the largest reported drop in two years. As we’ve discussed before, though, when looking at data […]

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Three Reasons Why Mortgage Rates Are Higher This Morning

July 5, 2007

Mortgage markets are making like last night’s fireworks, exploding in the sky with a bang. There are three main factors pushing rates higher today: Bank of England raised their interest rates by 0.25% and foreshadowed future increases European Central Bank Chairman Jean-Claude Trichet said that inflation is “likely to rise again significantly towards the end […]

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The Week In Review (July 2, 2007) : What To Watch For

July 2, 2007

As expected, Ben Bernanke & Co. left the Fed Funds Rate unchanged at 5.250% last week but that didn’t stop markets from improving slightly overall. Markets were buoyed by a low reading on last Friday’s PCE index, the Fed’s favored inflation measure. Low inflation readings are good for mortgage rates so it’s no surprise that […]

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Which Way Will They Go? Inflation Up, Growth Down, Or Both?

June 28, 2007

The Federal Open Market Committee adjourns from a two-day meeting today and so this is a good time to remind yourself: The Fed does not control mortgage rates. Rather, the Fed sets the Federal Funds Rate. And the FFR is, in turn, used to determine Prime Rate. Prime Rate, in turn, is used to determine […]

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The Fed Starts Its Two-Day Meeting

June 27, 2007

The mortgage markets officially enter “Wait-and-See” mode beginning today as the Federal Open Market Committee begins their two-day meeting. The importance of the FOMC’s meeting to mortgage markets is all in the words of the committee as opposed to their actions (or lack thereof). After all, the group has not “done anything” in a year […]

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The Week In Review (June 25, 2007) : What To Watch For

June 25, 2007

For the first week in a long while, mortgage rates ended the week better than how they started. As we talked about last week, when there are no major data releases, the markets tend to move on momentum and psychology.  That’s precisely what pushed mortgage rates lower over the past five days. This week, though, […]

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In The Summer, Mortgage Rates Can Change More Swiftly Than Usual

June 20, 2007

It was another favorable day for mortgage rates yesterday as average housing data and momentum trading carried bond prices higher. Bond prices up, mortgage rates down, of course. All things considered, mortgage bonds should not have moved as much as they did.  But, this is the summer season and in the summer, fewer traders show […]

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The Week In Review (June 18, 2007) : What To Watch For

June 18, 2007

After a tame Consumer Price Index report Friday, mortgage bonds staged a brief rally and rates retreated slightly. Earlier in the week, mortgage rates were at their highest point in almost a year. Unfortunately for rate shoppers, mortgage investors are behaving like Dr. Jekyll and Mr. Hyde right now.  One moment, they hate the outlook […]

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What Role Do You Play In This Rising Mortgage Rate Environment?

June 13, 2007

The American Consumer keeps spending. This morning, the monthly Retail Sales report showed a larger-than-expected jump.  Even after stripping out elevated gas prices, the sales increase was more than double the expected amount. The economy surges ahead, fueled by everyday spending, and this does not bode well for the future of mortgage rates. The recent […]

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