MMG Weekly: Revealing Fed Minutes
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|In This Issue|
Forecast for the Week: Look for key news on housing, consumer inflation, consumer spending, and manufacturing.
View: There's a new scam this tax season. Be sure to read the details below and share them with clients and colleagues.
|Last Week in Review|
"The one function that TV news performs very well is that when there is no news, we give it to you with the same emphasis as if there were." David Brinkley. While last week's economic calendar may have started off on the quiet side, the news picked up steam in the second half of the week. Read on for the highlights.There was good news in the labor markets, as weekly Initial Jobless Claims fell by 32,000 in the latest week to 300,000. This was near a seven-year low and a signal that the labor markets may be coming out of hibernation as spring starts to bloom. In addition the 4-week moving average of claims, which irons out seasonal abnormalities, also fell. Meanwhile, the Consumer Sentiment Index for April came in above expectations, showing that consumers are feeling positive about the economy as we head into warmer months.The housing sector also had good news to report, as foreclosure activity across the nation continues to decline. RealtyTrac reported that foreclosure filings fell to the lowest level since the second quarter of 2007. In addition, March was the forty-second consecutive month where foreclosure activity decreased from the previous year, with foreclosure filings declining by 23 percent from March 2013 to March 2014.
What does this mean for home loan rates? Typically good news helps Stocks improve at the expense of Bonds, including Mortgage Bonds (the type of Bonds on which home loan rates are based). However, Bonds and home loan rates were able to improve last week as the Stock market seemed to begin a correction from recent gains.
In addition, the minutes from the Fed's March meeting of the Federal Open Market Committee imply that the Fed will continue tapering its Bond and Treasury purchases this year. Remember that the Fed is now purchasing $30 billion in Treasuries and $25 billion in Mortgage Bonds to help stimulate the economy and housing market. This is down from the original $85 billion per month that the Fed had been purchasing. Additional tapering of these purchases will continue to impact our economy and home loan rates as we move ahead this year, and this is an important story to monitor.
The bottom line is that now remains a great time to consider a home purchase or refinance, as home loan rates remain attractive compared to historical levels. Let me know if I can answer any questions at all for you or your clients.
|Forecast for the Week|
After last week's quiet economic calendar, this week features an array of reports touching on key segments of the economy.
All capital markets will be closed on Friday in observance of Good Friday. In addition, the Bond markets will close early on Thursday at 2:00 p.m. EDT.
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. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.
When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse.
To go one step further—a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.
As you can see in the chart below, Bonds were able to improve last week. With a busy economic calendar ahead, I'll be watching the markets closely this week.
Chart: Fannie Mae 4.0% Mortgage Bond (Friday April 11, 2014)
|The Mortgage Market Guide View...|
|IRS Warns of E-mail Tax Scam
Watch out for bogus e-mails claiming there's a problem with your 2013 tax return.
By Cameron Huddleston, Kiplinger.com If you get an e-mail that appears to be from the IRS and claims that there is a problem with your 2013 tax return, do not respond. It's the latest scam to surface this tax season.Scammers are sending phishing e-mails that appear to be from the IRS Taxpayer Advocate Service and warn taxpayers that their 2013 income has been flagged for review due to a document processing error, according to the IRS.To resolve the issue, recipients are instructed to contact the IRS Taxpayer Advocate Service by clicking on a link within the e-mail. The link supposedly provides information about the taxpayer advocate assigned to their case or allows taxpayers to review their reported income. However, the IRS reports that the link actually leads to a Web site that solicits personal information—which thieves can use to steal your identity or access your accounts.Although the Taxpayer Advocate Service is a legitimate entity, it does not initiate contact with taxpayers by e-mail, text or any social media network—nor does the IRS. If you receive an e-mail that appears to be from the IRS or Taxpayer Advocate Service, do not reply to it and do not click on any links within the e-mail. Forward the e-mail to the IRS at firstname.lastname@example.org.Also beware of phone scams during tax season. Scammers have been calling people across the country claiming that they owe money to the IRS and making threats including arrest if they don't pay up, according to the IRS. Learn more about this phone scam as well as steps to take to lower your risk of fraud during tax season.
Reprinted with permission. All Contents ©2014
Economic Calendar for the Week of April 14 - April 18
Questions, Comments or For more information you can email Christian Penner at TheMortgageTeam@ChristianPenner.com or visit us online at www.ChristianPenner.com or you can call us directly at: 561-316-6800
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