This past Wednesday we heard the message regarding interest rates come directly from Federal Reserve Chairman, Ben S. Bernanke at a news conference in Washington (see video). Listening to his message tells us the Fed thinks the economy will just trudge along, and accommodative monetary policy will be required to keep the economy growing at least at a modest pace. In short, the message was the same as previous messages from the Fed, stable long-term inflation expectations, a tepid economic recovery, and a more than fragile job market. Also one particular statement out of the norm that there will be “exceptionally low levels for the Federal Funds Rate at least through late 2014.” Quite different from previous statements of “low rates until mid-2013.”
The bottom line is that Bonds and home loan interest rates remain at historic low levels, which means now is a great time to purchase a home.
Forecast for the Week
We will see plenty of important economic news this week:
- On Monday, the Core Personal Consumption Expenditure (PCE) will be watched. Any movement in the PCE indicating a rise in inflation will move Bond prices lower and home loan interest rates higher.
- Tuesday and Wednesday will feature Manufacturing with the Chicago PMI and the ISM Index.
- Also on Tuesday Consumer Confidence will be announced.
- Initial Jobless Claims will be released on Thursday. Last week we saw an increase of 21,000 so this will be closely watched.
- Friday will be the all important Employment Report which consists of Non-fram Payrolls, the Unemployment Rate, Average Workweek and Hourly Earnings. This report could make a big impact on the markets. Something definitely to watch closely.
Credit: Video: Bloomberg, http://www.bloomberg.com/video/84905884/
