inflation

The Fed Gets Ambiguous; Mortgage Rates Fall

March 22, 2007

Ben Bernanke and the Federal Open Market Committee spoke with ambiguity yesterday in electing to keep the Fed Funds Rate at 5.250%. So far, mortgage rates have benefited. A major goal of the Fed is to manage the expectations of markets.  Therefore, what the Fed does is sometimes not as important as what it says. […]

Read the full article →

The Cost of Living Index Increases; Mortgage Rates Increase, Too.

March 16, 2007

The Consumer Price Index came in higher than expected this morning, registering a 0.371% increase.  Excluding volatile gas and food prices, CPI grew by 0.241%.  The latter figure is called “Core CPI”. CPI is sometimes referred to as the “Cost of Living Index” because it measures how consumers are impacting by changing prices of energy, […]

Read the full article →

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

February 26, 2007

Aside from CPI, last week was quiet on the economic data front.  Traders used the week to catch their breath and look around a bit at market conditions.  They liked what they saw and strong demand for bonds pushed mortgage rates down. This week, the big Market Mover Day is Thursday, coinciding with the release […]

Read the full article →

How Decimal Points Mess With Markets

February 22, 2007

A little known fact about yesterday’s CPI numbers: they weren’t as inflationary as you would have otherwise thought.  It all comes down to decimals and rounding. What The Expectations Were CPI: 0.1% increase in January Core CPI: 0.2% increase in January What The Headlines Reported CPI: 0.2% increase in January Core CPI: 0.3% increase in January […]

Read the full article →

CPI Is Higher And Contained In Comfort Range

February 21, 2007

Markets did not like today’s Consumer Price Index figures which came in higher than expected.  However, the downbeat mood this morning is not enough to reverse the recent downward trend in mortgage rates. The chart at right shows CPI over the past two years and the band collars the Fed’s articulated “comfort zone” for inflation. […]

Read the full article →

The Week In Review (February 19, 2007) : What To Watch For

February 19, 2007

Fed Chairman Ben Bernanke carried the biggest stick in the mortgage rate market last week.  His “Goldilocks” testimony before the Senate Banking Committee spoke of favorable growth and subsiding inflation. Markets expected a harsher tone from Bearded Ben and that is why rates dropped post-testimony — the expectation diminished that the Fed will raise the […]

Read the full article →

Why Nations Care What Ben Bernanke Says To The U.S. Congress

February 15, 2007

The markets continue to show their appreciation for Fed Chairman Bernanke’s testimony yesterday and mortgage rates are falling in response. So, why do the Chairman’s words hold such sway over global markets?  Simple.  Buying and selling U.S. dollar-denominated securities is an integral part of central banking fiscal management policies worldwide.  When the Chairman says that […]

Read the full article →

Markets React To Bernanke’s Testimony

February 14, 2007

Addressing the Senate Banking Committee this morning, Fed Chairman Ben Bernanke gave the speech that most people expected: The current monetary policy (read: Fed Funds Rate) is at a level that both sustains economic growth, and tempers inflation pressures. In addition, inflation expectations “appear to have remain contained,” Bernanke said.  He called that “encouraging” and […]

Read the full article →

Three Fed Speakers Expected To Stay On Course Today

February 9, 2007

As the week closes today, three Federal Reserve Presidents are set to deliver speeches. The most well-known of the speakers is Dallas Fed President Richard Fisher.  Fisher is known for speaking candidly and has produced a plethora of sound bites over the years. Also scheduled to speak are Cleveland Fed President Sandra Pianalto and St. […]

Read the full article →

The Week In Review (February 5, 2007) : What To Watch For

February 5, 2007

Last week was not for the weak-hearted as mortgage rates bounced around like a fumbled Super Bowl football.  In a widely-expected move, the Federal Reserve held the Fed Funds Rate at 5.25% for the fifth consecutive meeting, stating that growth is “moderate” and that inflation pressures may be subsiding. Consumer spending represents two-thirds of the […]

Read the full article →

The Market Stops To Catch Its Breath

January 30, 2007

60 days ago, markets put a 36% probability that the Fed would lower the Fed Funds Rate by March 2007.  Today, that probability is zero.  If you’re wondering why mortgage rates have ascended so quickly, that’s part of your answer — inflation expectations are changing. Rates increased again on Monday and today the market catches […]

Read the full article →

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

January 29, 2007

After a week of bludgeoning in which mortgage rates rose as much as 0.50% on the heels of a supposed housing sector rebound, don’t expect the fireworks to stop anytime soon. This Monday and Tuesday will be quiet with respect to economic releases, but Wednesday through Friday will be jammed-packed with mortgage-rate-moving data. The highlights […]

Read the full article →

Has “Housing Stability” Become a “Housing Rebound”?

January 26, 2007

Mortgage bonds continue their slide after yesterday’s outright hysteria. Today’s New Homes Sales showed a 4.8% jump in December to an annualized pace of 1.12 million homes.  This is about 14% higher than July’s pace and some economists are wondering if “housing stability” just turned into “housing rebound”. Home supply plummeted from 7.2 months to […]

Read the full article →

The Market Sees What It Wants To See

January 24, 2007

With the Federal Open Market Committee scheduled to meet for two days beginning January 30, the Fed has entered “blackout mode” and no Fed speakers are slated for the next week.  Combine Fed Silence with lack of economic data, and market are moving on emotion and gut feel. That’s bad news for rate shoppers because […]

Read the full article →

The Irrelevance of The University of Michigan Consumer Sentiment Survey

January 19, 2007

Today’s University of Michigan Consumer Sentiment survey showed that Americans are feeling terrific about the state of the economy.  The index jumped to 98.0 in January from last month’s 91.7 level. On a broader level, this is not an important piece of data for mortgage markets.  The idea is that a more confident consumer will […]

Read the full article →

Why PPI Exceeded Expectations And Nobody Minded

January 17, 2007

With all signs pointing towards economic growth, markets were not all surprised when today’s Producer Price Index registered higher than expected.  Mortgage markets are flat in response to the data. The impact of PPI is muted for three other major reasons, too: At 2.0%, the year-over-year increase in PPI is much lower than it has […]

Read the full article →

How Cold Weather Can Slow Down the Economy

January 16, 2007

As a big chill settles in over the country, oil prices continue their decline and are now down 15% since mid-July.  High oil prices are typically associated with inflation, but given the precarious balance of the U.S. economy, low oil prices may lead to inflation, too. Americans fuel the economy by spending money on goods […]

Read the full article →

It Was “Happy Holidays” for Retailers in December

January 12, 2007

For all of the talk about the slowdown in consumer spending, it appears that this Holiday Season was a winner.  This morning’s Retail Sales report doubled economists’ expectations by showing 1.0% growth. This is just one more inflationary pressure in the economy and makes it less likely that the Fed will lower the Fed Funds […]

Read the full article →

How Will Oil’s Plunging Prices Impact Mortgage Rates

January 9, 2007

This summer, oil crossed the $77 threshold per barrel and since then, it has been on a steady decline. Today, it crossed $58 per barrel. Lower prices for oil should reduce heating bills and gas pump receipts for Americans this winter. High oil prices are a stimulus for inflation so on the surface this would […]

Read the full article →

Next Entries →