inflation

The Five Words Spoken By Ben Bernanke That Rattled Mortgage Markets

June 6, 2007

Behold the power of the English language. With just five words, Federal Reserve Chairman Ben Bernanke rattled markets yesterday. In discussing how housing has slumped (and may continue to slump), Bernanke cited that weakness in the sector should not hold the rest of the economy back. This is departure from earlier this year.  In Q1, […]

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

June 4, 2007

Another week, another vicious rise in mortgage rates.  There just wasn’t enough “bad” news to reverse the market’s recent trend to the upside. There were three notable pieces of news from last week: The Fed’s May meeting minutes revealed a genuine concern that inflation is not slowing as anticipated The employment report showed that employers […]

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How Expectations For The Future Impact Mortgage Rates Today

June 1, 2007

Mortgage rates will not get a helping hand from the bevy of data released this morning. As markets anticipated, headline data supports the notion that the Fed will raise the Fed Funds Rate from its current 5.250% level before it lowering it. This is completely opposite from what we were seeing just two months ago. […]

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Federal Reserve: Inflation Remains “Uncomfortably High”

May 31, 2007

Tomorrow, the fireworks begin.  Or, continue, depending on your point of view. After a span of several weeks in which mortgage rates have steadily increased, markets are gearing up for a heavy day of data that could confirm the worst fears of investors everywhere: the U.S. economy is not slowing down. The Fed’s May meeting […]

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The Week In Review (May 29, 2007) : What To Watch For

May 29, 2007

Mortgage rates continued their climb higher last week as markets dealt with contradictory data about the health of the housing and the economy. New Home Sales registered its biggest gain in 14 years while Existing Home Sales reached a 4-year low; and purchases of “big-ticket” items such as computers, appliances and furniture unexpectedly jumped while […]

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The Week In Review (May 21, 2007) : What To Watch For

May 21, 2007

Mortgage rates moved substantially higher last week as traders reacted to Thursday’s Initial Jobless Claims. The amount of new unemployment filing dropped below 4-week trend line is now at its lowest levels in a year. Fewer unemployment claims coupled with increasing employee wages raised fears of inflation and inflation nearly always pushes mortgage rates higher. […]

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Hot Housing Starts Figure May Push Mortgage Rates Higher

May 16, 2007

Each month, the Commerce Department releases a statistic titled “Housing Starts” that measures residential construction activity. This morning, the Commerce Department released April’s Housing Starts data (PDF) and the headline data reflected a 2.5% (±9.3%) increase in new construction. Markets had anticipated a 0.8% decrease.  This coincided with a decrease in available homes, as shown […]

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The Week In Review (May 14, 2007) : What To Watch For

May 14, 2007

Last week in the mortgage markets was thick with hype and thin with action. Whenever the Fed meets, there is potential for wild swings in mortgage rates.  And, although the Fed doesn’t control mortgage rates, it’s views on inflation and the economy carry tremendous weight with traders, with economists, with banks, and with governments across […]

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The Week In Review (May 7, 2007) : What To Watch For

May 7, 2007

Data painted a dismal picture for the economy last week including tempering inflation readings, slowing job growth, depressed home sale data, and ever-higher gasoline prices.  This gave markets hope that the Fed may start to ease up on the Fed Funds Rate. But, while the stock market rallied on the news, the bond market continued […]

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The Week In Review (April 30, 2007) : What To Watch For

April 30, 2007

Last week, a ranking Fed official delivered a “wait-and-see” speech on inflation and that roiled the mortgage markets plenty. After sitting in a tight range for Monday through Wednesday, rates exploded higher Thursday as markets abruptly changed their expectations of growth for the rest of 2007. Despite weak housing numbers, employment and consumer spending figures […]

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What’s All That Yellen About?

April 27, 2007

So much for market calm. The mortgage market tanked yesterday when, in response to conflicting data about growth and inflation, San Francisco Fed President Janet Yellen said “watchful waiting” is the Fed’s likely next step. This surprised markets because most expect the Fed to lower the Fed Funds Rate within the next few months. The […]

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The Week In Review (April 23, 2007) : What To Watch For

April 23, 2007

The economy showed signs of pushing forward last week, but major pressure on the average American consumer surfaced in the form of rising gas prices. Overall, it was a mixed bag for mortgage markets. The Consumer Price Index (CPI) jumped 0.6% last month.  This cost of living increase was much larger than expected and mostly […]

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Whichever Way The Winds Blows

April 18, 2007

Up and down.  Up and down.  Up and down. It’s been a veritable roller coaster over the past two weeks for mortgage rates, mostly because traders can’t find the answer to the most important question facing mortgage markets: Are in the midst of inflation, or not? Everytime we see strong data in one sector of […]

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Markets Turned Quickly And Left Rate Shoppers In Their Wake

April 12, 2007

So, just how quickly have the markets turned? According to Fed Futures Trading as watched by the Cleveland Federal Reserve, on March 13, it was as likely that the August Fed Funds Rate level would be 5.250% as it would be 5.000%. In other words, markets were betting with equal odds that the Fed would […]

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The Magic of Video Games: Ride the 117-Year Housing Roller Coaster

April 5, 2007

Want some help putting home values in historical perspective? Using the video game Roller Coaster Tycoon, Speculative Bubble created a roller coaster whose tracks follow home values (adjusted for inflation) from 1890 to 2007. The ride lasts three-and-a-half minutes, but the last thirty seconds really hammer home the point. You can almost hear the people […]

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It’s A Waiting Game Until Thursday Afternoon

April 3, 2007

There is little on the domestic front to move markets today as traders wait for Friday’s jobs report. The jobs data will take on more significance this month than in recent months because of Ben Bernanke’s testimony to Congress last week. The Fed Chief spoke more strongly about inflation that we’ve heard from him in […]

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

April 2, 2007

Last week, Ben Bernanke’s testimony before Congress served as a stark wake-up call that inflation is not going away so easily. Later in the week, hard data backed that up.  PCE, the Fed’s favorite inflation gauge, beat expectations and pushed the year-over-year increase to 2.4%. The Fed hopes that PCE will be 2.0% by 2008 […]

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Bernanke Says Inflation Is “Somewhat Elevated”

March 29, 2007

Ben Bernanke delivered a prepared speech to the congressional Joint Economic Committee Wednesday in which he stated that inflation is “somewhat elevated”, but that it’s no reason to expect a Fed Funds Rate hike anytime soon. Some of Chairman Bernanke’s more salient points: Economic growth has slowed because of a “substantial correction” in the housing market […]

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What Last Night’s Oil Price Spike Reveals About Market Nerves

March 28, 2007

Oil prices are down since last year overall, mostly because the political risk has been removed from pricing. Last night, though, a rumored Iranian attack on a U.S. ship in the Persian Gulf showed how quickly markets can flip if oil supply is threatened. Immediately, the political risk of tightened oil supply found its way […]

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The Week In Review (March 26, 2007) : What To Watch For

March 26, 2007

The Fed held the Fed Funds Rate at 5.250% last week and included verbiage in its Press Release that the FFR may have to come down before it goes up again.  This gave investors reason to cheer and the stock market rallied to its best week in four years. Mortgage rates did not fare as […]

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