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Events
This Week:
Inflation
Low
Industrial
Prod. Up
Housing
Starts Fell
Manufacturing
Mixed
Events
Next Week:
Tues
6/22
Existing Sales
Wed
6/23
Fed Meeting
New Home Sales
Thur 6/24
Durable Orders
Fri
6/25
GDP
Sentiment
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Low
Inflation Helps Mortgage Rates
Economic
data moved mortgage rates this week. Slower than expected economic growth data
and tame inflation figures were favorable for mortgage markets. As a
result, mortgage rates ended the week lower.
Heading
into a Fed meeting next week, the low inflation data released this week
means that there is little pressure on the Fed to begin raising the fed
funds rate. May Core Consumer Price Index (CPI) inflation rose at a 0.9%
annual rate, the lowest level in four decades. Usually the major task of
Fed officials is to prevent inflation from moving too high, but they are
now concerned about the risk that inflation will drop too low. Fed
officials are most comfortable when inflation remains in the 1.5% to 2.0%
range. This also means that there is little inflationary pressure to push
mortgage rates higher. Of course, with expectations set so low, if
inflation were to surprisingly increase in coming months, it could cause a
large reaction in mortgage markets.
Will
the "close by" deadline to receive the Home Buyer Tax Credit be
extended? The answer to this question is not known as of this Friday morning.
The Senate has approved an amendment to a larger bill to do so, but the
larger bill is still being debated and its passage is not certain.
Extending the "close by" deadline will benefit qualifying home
buyers who are not able to close by June 30, the original deadline.
Extending the deadline sooner rather than later would help relieve some
anxiety. Right now, people in all phases of the home buying process are
working very long hours to close an unusually large number of purchases
before the end of the month.
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Also Notable:
- May Housing Starts fell 10%, and Building Permits
declined 6%
- In April, job openings rose to the highest level
in 16 months
- The government debt of Greece was downgraded
again
- The Treasury will auction $108 billion in 2-yr,
5-yr, and 7-yrs next week
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Average
30 yr fixed rate:
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Last
week:
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+0.05%
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This week:
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-0.10%
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Stocks
(weekly):
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Dow:
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10,400
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+200
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NASDAQ:
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2,300
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+50
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Week
Ahead
The big
story next week will be Wednesday's Fed meeting. No change in the fed funds
rate is expected, but investors will be watching closely for hints about
future Fed actions. Before the meeting, Existing Home Sales will be
released on Tuesday and New Home Sales will come out on Wednesday. Durable
Orders, an important indicator of economic activity, will be released on
Thursday. The final revisions to first quarter Gross Domestic Product (GDP)
will come out on Friday, along with Consumer Sentiment. In addition, there
will be Treasury auctions on Tuesday, Wednesday, and Thursday.
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