The Good, The Bad And The Ugly

Last weeks economic news was a bit like the title of one of Clint Eastwoods famous movies, The Good, The Bad and The Ugly. We certainly saw both good and bad news in economic reports from last week. Let’s see how they impact mortgage home loan rates.

A good sign for the economy was the news from Retail Sales which rose in March by a healthy 0.8 percent. This showed us that consumers purchased all kinds of products and is a growing trend looking back at January and February reports.

The glee ends though in the manufacturing sector where both the Empire State Manufacturing Index and the Philly Fed Index came well below market expectations. Many financial analysts attribute this to a global slowdown. These same analyst remain cautious but optimistic and feel manufacturing will soon begin to be positive.

In the housing sector, things weren’t pretty either as both Existing Home Sales and Housing Starts fell in March.

And things in the labor market were ugly as well. Initial Jobless Claims rose sharply higher. There were 386,000 fresh claims this past week, above the 375,000 that was anticipated.

News in Europe was all roses either. There is growing concern about Spain’s ability to paid down the debt as well as meet new budget deficit targets. This has spurred the G-20 to push the European Central Bank to do more to contain their debt crisis as it threatens global growth. Let’s also not forget France, Portugal, Ireland, and Greece to deal with in the future. At best it’s a mess.

So what does this mean if you are buying a home? Likely good news for home purchasers. Investors will keep their money in relative safe places like U.S. bonds, which will benefit mortgage bonds, to which mortgage home loan rates are tied to. So as the economy has it’s good and bad, bonds will rally on bad news and stocks will rebound on good news. Bad news generally helps mortgage home loan rates while good news is the opposite.

Forecast

There is plenty of economic news on the calendar for this week. Tuesday Consumer Confidence will be released as well as New Home Sales for March, followed by Pending Home Sales for March on Thursday.

On Wednesday, Durable Goods Orders will be released. This report is about products that are supposed to last at least three years.

Jobless Claims will be released on Thursday. We have seen a steady rise of new claims the past month, which is not very encouraging to the labor markets.

On Friday, we will get the Employment Cost Index, which measures the costs of hiring and paying the American workforce. Higher costs could lead to inflation pressures, which could affect mortgage home loan rates.

The material provided is for informational and educational purposes only and should not be construed as legal, investment and/or real estate advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

 

 

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