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By Taff Weinstein at

Couples Are Out Buying Singles In Homes

Couples able to afford more homes than singles:

A couple with a combined household income of $80,800 could afford 82% of all US homes and would be able to save their down payment in just 5 years.

But for singles, its another story.

An analysis from Zillow calculates that less than half of all US homes are affordable for a single buyer based on a median household income of $34,500. And since they don't have the help of a spouse, it could take up to 11 years to save up enough for a standard down payment.

"Nearly two-thirds of Americans agree that buying a home is a central part of living the American Dream, but for unmarried or un-partnered Americans, that dream is increasingly out of reach," said Zillow senior economist Aaron Terrazas. "Single buyers typically have more limited budgets, which means they are likely competing for lower-priced homes that are in high demand. Having two incomes allows buyers to compete in higher priced tiers where competition is not as stiff."

Source: Zilllow.com

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) lost -11 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slighter higher for the week.

Overview: We saw very weak demand for our 10 year note and 30 year bond auctions but MBS were mostly pressured (higher rates) due to strong jobs data (45 year low) and hawkish commentary by one of the major central banks. While we did see a temporary spending bill, the overall downward trend of MBS since January 1 (-187 BPS) kept fixed mortgage rates on an upward trend.

Jobs, Jobs, Jobs: Initial Weekly Jobless Claims hit 221K vs est of 232K. The more closely watched 4 week moving average dropped to 224,500 which is A 45 YEAR LOW. The December Job Openings and Labor Turnover Survey (JOLTS) showed 5.811M jobs that are currently unfilled. The market was expecting 5.9M. November was revised upward from 5.879M to 5.978M. The lack of labor slack continues to be a major problem.

Can Kicked: We had a brief government shut down in the wee hours of the morning but have since rebooted. The Senate passed their pork-laden bill with ease while the house had a mini rebellion of 67 conservatives voting against the bill. It funds the government only until March 23. It added money and time to defense spending and upped the borrowing authority until 2019. Its an awful deal that jacks up our deficit but it keeps the doors open for a little longer.

Great Brittan: Bank of England kept rates unchanged at 0.5%, and QE flat as expected in a unanimous 9-0 vote. But BOE raised its growth forecast and said that the "Committee judges that, were the economy to evolve broadly in line with the February Inflation Report projections, monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period than anticipated at the time of the November Report, in order to return inflation sustainability to the target."

What to Watch Out For This Week:

By Taff Weinstein at

Home-ownership preferred to renting in 78 out the 100 Largest U.S. Cities

Home-ownership preferred to renting in 78 out the 100 Largest U.S. Cities:

However, 22 out of the largest 100 cities are seeing more renting households. RENTCafé has released their analysis based on American Community Survey archives from the US Census Bureau’s public database. The analysis compared the number of people living in renter and owner-occupied housing units in 2006 and 2016.

The analysis found that the renter population increased by more than 23 million over the period, growing by more than a quarter. Meanwhile, the overall homeowner population increased by less than 700,000 – a virtual standstill compared to the growth in renter population.

Although the US is far from becoming a renter nation, the changes in populations were enough to shift the balance in some of the largest cities that were previously dominated by homeowners. From only 20 out of the 100 largest cities dominated by renters in 2006, there are now 42 such cities.

The analysis found the biggest change in renter share in Toledo, Ohio, where the percentage of renters increased 31.1% over the decade from 38.3% in 2006 to 50.3% in 2016. Memphis, Tenn.; Tampa, Fla.; Hialeah, Fla.; and Stockton, Calif., rounded out of the top five new renter-dominated cities in terms of renter share change.

In other large cities, the renter-homeowner population ratio has changed dramatically, despite the renter population continuing to trail homeowners. The analysis found that all large cities recorded increases in the rentership rate, with only Anchorage, Alaska; Irving, Texas; and Winston-Salem, N.C., posting decreases.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) lost -102 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move higher for the week.

Overview:  The combination of a more "hawkish" tone from the Federal Reserve and very strong manufacturing, wages and jobs data continued to brighten the economic growth outlook.  Bonds do not perform well in a growing economy and continued their downward trend that we have seen all year which has meant a steady upward march in fixed mortgage rates.

The Talking Fed: The FOMC voted 9-0 to keep their Fed Fund Rate unchanged at 1.25% to 1.50%.
You can read the official statement here.
They had a more noticeably more "hawkish" tone in this statement.  In December they said that inflation would "remain somewhat below 2% in the near term".  That is now "Inflation on a 12 month basis is expected to move up this year".
They also said that:
 - Economy to warrant further gradual increases in rates
 - Market based inflation compensation gauges rose in recent months
 - Gains in employment, spending and investment has been solid.
 - Janet Yellen's last day is Saturday.  Jerome Powell will be sworn in on Monday.

Jobs, Jobs, Jobs:
January Non-Farm Payrolls 200K vs est of 180K
December NFP revised upward from 148K to 160K
November NFP revised downward from 252K to 216K
The three month rolling average is now 192K!
Wages:
Average Hourly Wages YOY hit 2.9% vs est of 2.6% (increase of 0.75 per hour)
Average Hourly Wage MOM 0.3% vs est of 0.3%
Average Hourly Wage is now $26.74
Unemployment:
The headline Unemployment Rate remained at 4.1% which matched expectations.
The participation rate remained at 62.7% vs est of 62.8%

Manufacturing: The January ISM Manufacturing data was very strong and beat out expectations handily with a 59.1 vs est of 58.8 reading. But the real story is ISM Prices Paid which shot up to a crazy 72.7 vs est of 68.0. 

The January Chicago PMI was very robust and handily beat out expectations with a reading of 65.7 vs est of 64.1. Keep in mind that ANY reading above 50.0 is expansionary and readings above 60.0 are crazy hot growth. December's block-buster reading of 67.6 was not a fluke or error, in fact it was actually revised even higher to 67.8.

What to Watch Out For This Week:

By Taff Weinstein at

Sales of Existing Homes Hit 11 year High

Sales of Existing Homes Hit 11 year High:

2017 ended up being the best year for existing-home sales in 11 years, according to the National Association of Realtors.

Existing-home sales dropped 3.6% month over month on a seasonally adjusted basis in December as inventory shortages were severe. But even with that decline, sales for all of 2017 were up 1.1% over the prior year, hitting a sales pace of 5.51 million – the highest since 2006.

Lawrence Yun, NAR’s chief economist said “The lack of supply over the past year has been eye-opening and is why, even with strong job creation pushing wages higher, home-price gains – at 5.8% nationally in 2017 – doubled the pace of income growth and were even swifter in several markets.”

Inventory, was tighter than ever and hit a new all-time low. Total US inventory at the end of December was 1.48 million existing homes available for sale – an 11.4% drop from the year before. Unsold inventory is at a 3.2-month supply at the current sales pace – the lowest level since NAR began tracking nearly two decades ago.

The median existing-home price in the US last month was $246,800, a 5.8% spike from December 2016. December of 2017 also marked the 70th consecutive month of year-over-year price gains.

“Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand,” Yun said. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace. … Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale.”

Source: National Association of Realtors

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) lost -6 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways for the week.

Overview:  Mortgage Backed Securities remained under pressure as long bond strategists continued to shift their hedges towards higher rates in the near term.  Overall, the week's economic data was strong but not by enough to accelerate the sell off.

Taking it to the House: Weekly Mortgage Applications increased by 4.5% led by Refinance Applications up 6.0%. Purchase Applications rose by 1.0%.

The November FHFA Housing Price Index rose by 0.4% on a MOM basis and is up 6.5% on YOY basis.

Existing Home Sales in December felt severe inventory constraints. Inventories fell by 10.3% to their lowest levels ever on record. The annualized sales pace hit 5.57M which was lower than the expectations of 5.70M but that was not due to lack of demand. It was due to lack of inventory. The median home price rose to $246,800.

Gross Domestic Product:  We got the first look at the 4th QTR GDP, it will be revised several more times but the initial reading of 2.6% is good steady growth. Odds are that by the time the final revision hits, that number will be closer to 2.9%.  Consumer Spending saw a very strong 3.8% increase.  Other highlights were a 14.2% burst in spending on durable goods items.  Residential Investment jumped 11.6% and non-residential fixed investment rose by 6.8%.

Durable Goods Orders for December were much hotter than expected, coming in at 2.9% vs est of only 0.6%.  Plus, November was revised upward from 1.3% to 1.7%.  Aircraft and vehicles saw a nice surge in orders.

What to Watch Out For This Week:

 

By Taff Weinstein at

Tiny Houses May Become Large in New Homes

Tiny Houses May Become Large in New Homes:

A recent survey showed that 53% of new home buyers would entertain the idea of a tiny home (600 square feet or less) in the future with Gen Xers and Millennials more open to the idea compared to baby boomers and seniors.

This is just one of the gems found in a recent survey by the National Association of Home Builders.

The survey also revealed that 65% of homebuyers do not think conditions (inventory shortages and affordability) will improve in 2018, with 79% of prospective buyers surveyed being able to afford only half of the homes in their markets. A majority of homebuyers believe availability and affordability issues will not ease in 2018, they remain committed to their goal of purchasing a home

Rose Quint, assistant vice president of survey research for the NAHB, said the survey findings show that housing availability and affordability continue to be serious issues.

“These potential buyers see a problem with housing availability,” Quint said. “They know it’s a tough nut to crack, but they are not deterred. They are still planning to buy a house in the next 12 months.”

The NAHB said that although housing starts rose by 9% year over year in 2017, home production was still affected by the lack of affordable, buildable lots and the scarcity of labor. Characteristics of new homes were also essentially unchanged in 2017. NAHB said that home sizes averaged 2,627 square feet in 2017, remaining largely the same as the 2,622-square-feet average size in 2016.
Source: NAHB

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) lost -62 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move higher for the week.

Overview:  We had a holiday-shortened week (Monday closed for MLK Day), that ended with a government shutdown.  In between, long bonds continued their downward decline as bond traders are still at just the very early stages of rotating funds out of their positions in bonds due to the expected economic boost from Tax Reform.

Taking it to the House: New Housing Starts in December missed the mark with 1.192M units (calculated on an annualized basis) vs est of 1.275M. The real housing market is SFR and that came in at 836K which is not bad but off the pace in November. Needs to be consistently above 1M for it to help with our massive inventory shortage. Building Permits were stronger than expected (1.302M vs est of 1.290M). SFR pemits gained 1.8% to 881K.

The NAHB Housing Market Index for January hit 72 vs est of 72. This continues a string of very strong readings, any reading above 50 is favorable.

Production: December Industrial Production was more than double the market expectations (0.9% vs est of 0.4%) and Capacity Utilization was very robust with a 77.9% reading. This was the highest reading in 3 years.

The Talking Fed: The Beige Book which collects data from the 12 Federal Reserve Districts - found that the economy continued to expand from late November, with the various Fed districts reporting "modest to moderate" gains while Dallas was the sole outlier, recording a "robust increase."  Overall, the report showed a very tight labor market with many saying that they could not find skilled workers. But they also said that for the most part, businesses are seeing wages pick up at only a "modest" pace.

Consumer Sentiment: The preliminary January University of Michigan's Consumer Sentiment Survey Index came in at 94.5 vs est of 97.0. But this number will be revised once more this month. What is interesting in the survey is that expectations of inflation rose in the one year and five year horizon.

What to Watch Out For This Week:

 

By Taff Weinstein at

Average Consumer Credit Score Increased in 2017

Average Consumer Credit Score Increased in 2017:

Experian's State of Credit 2017 Annual Report showed that the average Vantage Score was 675 in 2017, compared to 673 the year before and only four points from the 2007 average of 679.

Dig deeper into those credit score numbers, and there’s even more good news. For the first time, there are more Americans with very high scores (Super Prime) than very low scores (Deep Subprime). For example, in 2017, 22.3% of Americans had Vantage Scores between 781-850 – a 6% increase versus 2016, and an improvement compared to five years ago when only 19.8% were in that range. Last year, 21.2% were below 600 – versus 22.6% in 2016 and 26.9% in 2012.

The Experian report also found generational differences in change in credit scores and mortgage debt levels.

Millennials had an average score that was four points higher than the previous year. Although they have lowered overall average debt by 8%, the age group increased their mortgage debt by 6%. Experian said the increase is a positive sign for the generation.

Generation X has the highest mortgage debt of all generations. Experience also found that the age group has a high instance of late payments compared to the national average. Despite these, consumers in this generation have improved their credit scores in 2017, signaling better debt management.

Baby Boomers and the Silent Generation continue to carry a lot of mortgage debt. However, Experian found that Baby Boomers have the lowest late payment instance and members of the oldest generation keep other debts low and make payments on time.

Source: Experian

 
What Happened to Rates Last Week?



Mortgage backed securities (FNMA 3.50 MBS) lost -48 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly higher for the week.

Overview:  We had very strong economic data (Retail Sales, CPI) and a very well received 30 year Treasury bond auction.  Both of which pressured long bond prices.  We also had news that Japan had decreased their balance sheet (aka a taper in bond purchases) and a news story (which China decried as a fake news) that China has been purchasing less U.S. debt (Treasury notes) and would decrease purchases further in 2018.  That signaled to bond traders that there may be less demand and also hurt our prices.

Retail Sales: Both Headline and Ex Autos showed a monthly growth rate of 0.4% in December which matched expectations. But the real story was the upward revisions to November. Headline was revised from 0.8% to 0.9% and Ex Autos was revised from 1.0% to 1.3% which is a very strong reading.

Inflation: December's Consumer Price Index report showed an upward movement in inflation. The closely watched Core YOY CPI moved from 1.7% to 1.8%. A small move but just one more tick closer to the 2.0% Fed target inflation rate which has been stubbornly evasive in this key data set. Producer Price Index YOY hit 3.0% vs est of 3.0%.

Treasury Auctions: We had very strong demand for our 30 year Treasury bond auction with indirect bids topping 70%. $12B went off at a high yield of 2.867% which is a very good rate considering that this time last year it was 2.914%.

Small Business Optimism: The NFIB Index hit 104.9 which is a slight pull back from November's reading of 107.5. However, November's reading was a 13 year high and this reading is one of the best that we have seen. So, this is still trending at very elevated levels.

Jobs, Jobs, Jobs: The November Job Openings and Labor Turnover Survey (JOLTS) show there are 5.9M jobs that are awaiting people with the proper job skills to fill them. This is a little lighter than market expectations but basically at the same pace as October.


What to Watch Out For This Week:

By Taff Weinstein at

Number of Renting Households Decline for the First Time Since 2004

Number of Renting Households Decline for the First Time Since 2004:

The 2017 Annual Rent Report prepared by ABODO showed that average Rents rose by 2.4% over the course of 2017.  And for the first time since 2004, the number of households that rent instead of own, dropped.

Citing Harvard University’s Joint Center for Housing Studies (JCHS), ABODO said more than a third of US households are renters, with about $43 million households renting across the US as of the middle of 2017.
 
ABODO said 2017 marked the first decline, although slight, of renting households in 13 years, citing a JCHS report. The number of renting households had been continuously increasing since 2004.

The decline in renting households in 2017 came as rents rose over the same period. At the end of 2017, one-bedrooms had a national median rent of $1,040, a 2.4% increase. Meanwhile, the national median rent for two-bedroom apartments was $1,252 in December, an increase of 3% from its level in January.

As rents rise, it strengthens demand for home sales as very low mortgage rates and unemployment levels make the cost of owning an appreciating asset far more attractive then throwing away monthly rent payments. 

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) lost -19 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly higher for the week.

Overview:  We had another holiday-shortened week with bond trading closed on Monday for New Years Day. Once again we had very strong economic data which did pressure MBS trades lower (higher mortgage rates) but this was mitigated by concern over a looming Government Shutdown (January 19th) and geo-political concerns overseas.

We got the survey data from the U.S. Bureau of Labor and Statistics on Friday, you can read their official report here.

Here is the Tale of the Tape:
Payrolls:
December Non Farm Payrolls  148K vs est of 190K.
November Non Farm Payrolls revised upward from 228K to 252K.
October Non Farm Payrolls revised downward from 244K to 211K.
The number that the bond market pays attention to is the rolling three month average and it is above 200K at 204K.
 

Wages:
Average Hourly Wages for December had a monthly gain of 0.3% which matched expectations.
Average Hourly Wages YOY had a gain of 2.5% which also matched expectations.
The national average hourly wage is now $26.63.
The bond market is the most sensitive to this data set and it was right what the market expected.
 

Unemployment:
The national Unemployment Rate remained at 4.1% for the 3rd straight month.
The Participation Rate remained at 6.7%.
This survey data is basically ignored by bond traders.

ISM Services:  The December reading hit 55.9 vs est of 57.6.  This data set was a miss but it is still above 55.0 which is very strong considering any reading above 50.0 is expansionary.

Manufacturing: The ISM Manufacturing Index for December was stronger than expected (59.7 vs est of 58.0) and is the 2nd highest reading since March of 2011. ISM Prices Paid (a key measure of future inflation expectations) jumped to 69.0 vs est of 65.0 and is one of the highest readings on record.

Factory Orders:  The November reading was stronger than expected (1.4% vs est of 1.1%) and October was revised upward significantly from -0.1% to +0.4%.

The Talking Fed: Cleveland Fed President Loretta Mester (voting member) said she is "o.k" with "three or four" rate hikes next year based upon her economic expectations but will need to see how Tax Reform impacts growth.

We got the Minutes from their last FOMC meeting where they raised their Fed Fund Rate by 1/4 point and showed median expectations of at least 3 rate hikes in 2018. There really were not any "bombshells" in the Minutes as views were generally favorable towards economic growth and the need to flatten out the curve (between inflation and the fund rate, which requires raising the Fed fund rate).

Construction Spending: The November data showed a nice pick up of 0.8% which beat out estimates of 0.5%. However October was revised lower from 1.4% to 0.9%

What to Watch Out For This Week: 

By Taff Weinstein at

Pending Home Sales Better than Expected

Pending Home Sales Better than Expected:

Pending Home Sales in November (signed purchase contracts that are not yet closed) were much stronger than expected (+0.2% vs market expectations of -0.5%) on a month-over-month basis.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 0.2 percent to 109.5 in November from 109.3 in October. With last month’s increase, the index remains at its highest reading since June (110.0), and is now 0.8 percent above a year ago.

Lawrence Yun, NAR chief economist, says contract signings mustered a small gain in November and were up annually for the first time since June. “The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear,” he said. “However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust. Realtors® say many would-be buyers from earlier this year, stifled by tight supply and higher prices, are still trying to buy a home.”

“The strengthening economy, and expectation that more millennials will want to buy, serve as promising signs for solid home buying demand next year, while also putting additional pressure on inventory levels and affordability,” said Yun.
Source: National Association of Realtors

What Happened to Rates Last Week?



Mortgage backed securities (FNMA 3.50 MBS) gained +43 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower for the week.

Overview:  We had a holiday-shortened week with bond trading closed on Monday for Christmas and closed early on Friday for New Years.  We had very strong economic data that would normally pressure MBS (causing higher mortgage rates) but instead we saw some demand for long bonds as traders "parked" their money in safe, low return bonds over the holiday week and end of year which drove up MBS prices which pushed mortgage rates temporarily lower.

Jobs, Jobs, Jobs: Initial Weekly Jobless Claims came in at 245K vs est of 240K and matched the prior week's 245K. The more closely watched 4 week moving average is still below 240K at 237,500.

Manufacturing: The December Chicago PMI (aka the "business barometer") was much higher than expected (67.6 vs est of 62.0) and is the highest reading of the year. In fact, its the highest reading in 6.5 years.

Trade Balance: Our trade deficit (importing more than exporting) jumped to $-69.7B vs est of $-67.7B, although our Exports did increase by 3.0%.

Taking it to the House: Pending Home Sales in November (signed contracts not yet closed) were much stronger than expected (+0.2% vs est of -0.5) on a MOM basis. The October Case-Shiller Home Price Index showed a YOY gain of 6.4% in their 20 metro city index. The median price from the Existing Homes report is a much better data set and gets more attention than this reading but still, it is yet another housing report showing steady appreciation.

Consumer Confidence: The December reading was lighter than expected (122.1 vs est of 128.0) however, it is still near a 17 year high and a very good reading.

What to Watch Out For This Week:

By Taff Weinstein at

New Home Sales Skyrocket, Best in 10 Years

New Home Sales Skyrocket, Best in 10 Years:

Sales of Newly Built Single Family Residences surged by 17.5% in November and 26.6% higher than this time a year ago and reached a level not seen in over 10 years.

The sales pace hit 733,000 on an annualized basis (vs 579,000 this time in November 2016), which is a very large gain.

The big spike in sales comes with a large increase in sales price as the median sales price of new houses sold in November 2017 was $318,700. The average sales price was $377,100.

Just like Existing Home Sales, inventory is still a major concern as the seasonally-adjusted estimate of new houses for sale at the end of November was 283,000. This represents a supply of only 4.6 months at the current sales rate.

Source: U.S. Census Bureau

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) lost -51 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move higher for the week.

Overview:  Tax reform took center stage and as it moved forward with the voting process through the week, it pressured mortgage backed securities lower (higher rates).  We also had some very solid economic data which pressured MBS pricing as well.

Can Kicked: The Government will remain open until January 19th now.

GDP: The 3rd QTR GDP number was revised from 3.3% down to 3.2%. Its the third time that we have seen this data and has it been revised higher and then lower. Regardless, it remains above 3.0% which is a strong reading and is the highest reading since Q1 2015.

Tax Reform: The Tax Bill was officially passed by both the House and the Senate and was signed into law by our President on Friday.   The key for the bond markets and rates, is the macroeconomic impact of over 4 trillion dollars of cash moving back into the U.S. from overseas. Already we are getting some positive comments from some the largest U.S. corporations:

- ATT says it will give a $1,000 bonus to 200,000 of its workers AND will make $1 billion dollars in capital investments
- FedEx gave an upbeat earnings forecast for 2018, saying it expects to benefit from the tax overhaul.
- Fifth Third Bank says it will give a $1,000 bonus to 13,000 workers and will raise the minimum wage for its workers to $15 per hour

Durable Goods: While the headline number look like a miss, actually due to the upward revisions to the prior month, these were ok readings. Durable Good Orders for November were up by 1.3% vs est. of 2.0%. However, the miss was due to the fact that October was revised upward significantly from -1.2% to -0.4%. New Orders are now up 8.9% on a YOY basis which is pretty solid.

Personal Consumption: Spending is the highlight of this report as Personal Spending in November increased by 0.6%. Personal Income increased by 0.3%. The Fed's key measure of inflation, PCE YOY hit 1.8%, still below their target rate of 2.0%.

Consumer Sentiment: The University of Michigan's Final December Reading was revised from 96.8 to 95.9. Still a very lofty number historically.

What to Watch Out For This Week:

By Taff Weinstein at

Home Builder Optimism at Highest Level Since 1999

Home Builder Optimism at Highest Level Since 1999:

Builder confidence in the market for newly-built single-family homes increased five points to a level of 74 in December on the National Association of Home Builders Housing Market Index (HMI) which is the highest reported level since July 1999, over 18 years ago.

“Housing market conditions are improving partially because of new policies aimed at providing regulatory relief to the business community,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.

“The HMI measure of home buyer traffic rose eight points, showing that demand for housing is on the rise,” said NAHB Chief Economist Robert Dietz. “With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components registered gains in December. The component measuring buyer traffic jumped eight points to 58, the index gauging current sales conditions rose four points to 81 and the index charting sales expectations in the next six months increased three points to 79.

Looking at the three-month moving averages for regional HMI scores, the Midwest climbed six points to 69, the South rose three points to 72, the West increased two points to 79 and Northeast inched up a single point to 54.
Source: NAHB

What Happened to Rates Last Week?


Mortgage backed securities (FNMA 3.50 MBS) lost -5 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways for the week.

Overview:  We had another week of strong economic data (Retail Sales) and our Federal Reserve raised their key interest rate (they do not control mortgage rates) as well as upgraded their economic projections.  Mortgage backed securities were largely not impacted by the Fed action and had only a very small change for the week.

The Talking Fed:
As widely expected, the FOMC voted to increase their key Fed Fund Rate by 0.25% to a range of 1.25% to 1.50% which is still well below the "neutral" rate (when inflation are rates are equal).

It was a very interesting contrast where the majority of the economic outlook was stronger than expected while their expectations that it would take a "couple of years" for inflation to hit 2%.
The vote was 8-2 with Kashkari and Evans voting against it.  However, BOTH of those Fed members are non-voting members in 2018, so their influence is greatly minimized.

Here are some key take- aways from the Fed:
- median expectations for the Unemployment Rate in 2018 and 2019 is 3.9%
- median expectations for GDP in 2017 and 2018 is 2.5% and in 2019 its 2.1%
- Inflation expectations don't hit 2.0% until 2019
- leaves pace of reduction in MBS and Treasuries as-is.
- Yellen says tax reform would give economy a boost.
- dot plot chart shows 3 rate hikes in 2018

Retail Sales: This was a very strong report.  The Headline November reading showed a MOM gain of 0.8% which is almost three times higher than expectations of 0.3%. Actually its better than that considering that October was revised high from 0.2% to 0.5%. Ex- Autos the data was even better with a 1.0% gain vs est of 0.6%, plus October was revised upward from 0.1% to 0.4%.

What to Watch Out For This Week:

By Taff Weinstein at

Home Equity Gains, Underwater Mortgages Decline

Home Equity Gains, Underwater Mortgages Decline:

According to the newly released CoreLogic Q3 2017 Home Equity Analysis, homeowners with mortgages (roughly 63 percent of all homeowners) have collectively seen their equity increase 11.8 percent year over year, representing a gain of $870.6 billion since Q3 2016.

Additionally, homeowners gained an average of $14,888 in home equity between Q3 2016 and Q3 2017. Western states led the increase, while no state experienced a decrease. Washington homeowners gaining an average of approximately $40,000 in home equity and California homeowners gaining an average of approximately $37,000 in home equity.

“Homeowner equity increased by almost $871 billion over the last 12 months, the largest increase in more than three years,” said Dr. Frank Nothaft, chief economist for CoreLogic. “This increase is primarily a reflection of rising home prices, which drives up home values, leading to an increase in home equity positions and supporting consumer spending.”

Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in a home’s value, an increase in mortgage debt or both.

“While homeowner equity is rising nationally, there are wide disparities by geography,” said Frank Martell, president and CEO of CoreLogic. “Hot markets like San Francisco, Seattle and Denver boast very high levels of increased home equity. However, some markets are lagging behind due to weaker economies or lingering effects from the great recession. These include large markets such as Miami, Las Vegas and Chicago, but also many small- and medium-sized markets such as Scranton, Pa. and Akron, Ohio.”

Source: CoreLogic

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) gained +18 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower for the week.

Overview:  The domestic economic data was strong but not strong enough to impact MBS trades as we were essentially in a holding pattern as the bond market was stuck in Tax Reform watch....waiting to see if the Bill would make it out of the reconciliation committee and if it does...how much different will it be from the original Senate/House versions?

Domestic Flavor:
Jobs, Jobs, Jobs: Big Jobs Friday!  You can read the official release from the Bureau of Labor Statistics here.
Tale of the Tape:
Jobs:
November Non-Farm Payrolls 228K vs est that were in the 190K to 200K range.
October NFP was revised lower from 261K down to 244K
September NFP was revised from 18K to 38K
NFP Rolling 3 month average is now 170K which is a good level and is an improvement over last month's 3 month rolling average pace of 162K.
Wages:
Average Hourly Wages increased on a month-over-month basis by 0.2% and is now $26.55 per hour.  The market was expecting a 0.3% increase.
Average Hourly Wages YOY moved from a 2.4% pace in October to a 2.5% pace in November.
Hours:
We had a rare increase in Average Hourly Wages from being stuck at 34.4 for several months up to 34.5 hours.  Usually an uptick in hours worked is a precursor to wage increases.
Employment: The Unemployment Rate remained unchanged at 4.1%.  However, for the first time on record, the manufacturing sector fell below 3.0% (2.6%).
The Participation Rate remained at 62.7%

LinkedIn showed that hiring in November showed a 26% increase YOY. U.S. hiring has been 10.4 percent higher in 2017 than in 2016. LinkedIn's report is compiled from its 143 million user profiles in the U.S., 20,000 company profiles and 3 million monthly job postings.

Consumer Confidence:  The preliminary December University of Michigan reading hit 96.8 which is a very strong reading but below expectations of 98.8, it will be revised in 2 weeks.

Geo-Political:
Can Kicked:  The House and Senate voted to extend everything until December 22nd.

ISM Services: The November reading was lighter than market expectations (57.4 vs est of 59.0) and a pull back from October's crazy hot reading of 60.1. But any reading above 50.0 shows monthly expansion and a reading above 55.0 is still very robust.

What to Watch Out For This Week:

By Taff Weinstein at

Pending Home Sales Best Since June

Pending Home Sales Best Since June:

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 3.5 percent to 109.3 in October. The index is now at its highest reading since June (110.0).

Lawrence Yun, NAR chief economist, says pending sales in October were primarily driven higher by a big jump in the South, which saw a nice bounce back after hurricane-related disruptions in September. “Last month's solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months,” he said. “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.”

According to Yun, the supply and affordability headwinds seen most of the year have not abated this fall. Although homebuilders are doing their best to ramp up production of single-family homes amidst ongoing labor and cost challenges, overall activity still drastically lags demand. Further exacerbating the inventory scarcity is the fact that homeowners are staying in their homes longer. NAR's 2017 Profile of Home Buyers and Sellers – released last month – revealed that homeowners typically stayed in their home for 10 years before selling (an all-time survey high). Prior to 2009, sellers consistently lived in their home for a median of six years before selling.

“Existing inventory has decreased every month on an annual basis for 29 consecutive months, and the number of homes for sale at the end of October was the lowest for the month since 19991,” said Yun. “Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand.”
With two months of data remaining for the year, Yun forecasts for existing-home sales to finish at around 5.52 million, which is an increase of 1.3 percent from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 6 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent.

Source: National Association of Realtors

What Happened to Rates Last Week?



Mortgage backed securities (FNMA 3.50 MBS) lost-14 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly higher for the week.

Overview:  We had a very big week on just about every front.  Tax Reform was finally passed early Saturday morning but during the week, Mortgage Backed Securities both improved and sold off on speculation of the Bill passing or not passing.  We got a huge dose of economic data with very strong GDP and Manufacturing data which was very positive for our economy and therefore negative for long bonds that do not perform well in a growth environment.  But the biggest market mover was when the news broke that Flynn was going to plead guilty to lying to the FBI.  Initially the bond market thought that this may derail support for our President and cause the Tax Bill to not make it, but in the end that did not happen.

Domestic Flavor:
Manufacturing: The November ISM Manufacturing (1/3 of our economy) was very strong but basically was in line with estimates (58.2 vs 58.4) any reading above 55 is very hot.

The November Chicago PMI hit 63.9 vs est of 63.0. Any reading above 50 is strong and readings above 60.0 are very, very very strong. This marks the 3rd straight month with a reading above 60.0 which has not happened since 2010.

GDP: We got our first revision to the previously released 3rd QTR GDP. It was revised upward from 3.0% to 3.3%. The market was expecting 3.2%. It is the highest growth rate since Q1 2015.

Construction Spending: We saw a nice pickup in October as it gained +1.4% vs est of 0.4%. YOY it is now up 2.9%. Overall a very good report.

Personal Income and Outlays: Wages were higher than expected as October's Personal Income increased by another 0.4% vs est of 0.3%. Personal Spending matched expectations with a monthly gain of 0.3%. The spread between the rising incomes and spending means that we actually saw a 1% increased in the personal savings rate.

The Fed's key measure of inflation, PCE on a YOY basis increased by 1.6% which was a little higher than expectations of 1.5%. Plus September was revised upward from 1.6% to 1.7%. Still below the Fed's target rate of 2.0% but moving closer. Core PCE YOY hit 1.4% which matched expectations.

The Talking Fed: President Donald Trump has nominated Carnegie Mellon University professor Marvin Goodfriend to be a member of the Federal Reserve Board of Governors. He would be filling a vacancy that happened in 2014 and has never been filled.

Fed Chair Janet Yellen will gave an Economic Update to the House. She opened with “The economic expansion is increasingly broad based across sectors as well as across much of the global economy," and “I expect that, with gradual adjustments in the stance of monetary policy, the economy will continue to expand and the job market will strengthen somewhat further, supporting faster growth in wages and incomes." She also said that Congress needs to pass more "pro-growth" policies and was concerned that after she leaves that there will only be 4 members on the Board of Governors.

The Fed's Beige Book was released and showed that the U.S. economy continued to grow at a "modest to moderate pace" through mid-November as the labor market tightened, the survey also noted.

"Most districts reported employers were having difficulties finding qualified workers across skill levels," the report said. Still, "wage growth was modest or moderate in most districts." This is prepared by all 12 districts and is used in the next FOMC policy meeting.

What to Watch Out For This Week:

By Taff Weinstein at

New Home Sales Hit 10 Year High, Average Sales Price above $400K for First Time Ever

New Home Sales Hit 10 Year High, Average Sales Price above $400K for First Time Ever:
The U.S. Census Bureau and the Department of Housing and Urban Development reported that New Home Sales for October hit a 10  year high with 685K units which beat out expectations of 620K.  This was a 6.2% monthly gain over September.

Sales Price
The median sales price of new houses sold in October 2017 was $312,800. The average sales price was $400,200 which is the first time on record that the average sales prices topped $400,000.

Inventory and Months’ Supply
The seasonally-adjusted estimate of new houses for sale at the end of October was 282,000. This represents a supply of 4.9 months at the current sales rate.

The Northeast is the standout sales region for the second month - up 30 percent to 56,000. Year-on-year sales in the Northeast are up 65 percent. The Midwest also was strong, up 18 percent in October for a yearly gain of 16.2 percent.  These are very strong metrics as it shows strong sales were not due a temporary demand spike related to the hurricanes in the South.

The biggest contributor in size to the month's sales is the West, up 6.4 percent to 167,000 for a yearly 14.0 percent gain. The South, which did not show any effect from the heavy hurricane season, rose 1.3 percent in October for a year-on-year increase of 14.0 percent.

Source: U.S. Census Bureau
What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) gained +9 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move sideways for the week.

Overview:  We had a holiday-shortened week with really only three full days of bond trading. It was a very light week in terms of economic releases that had any ability to impact bond trades.

Chicago Fed National Activity Index: The October reading showed a spike in overall economic activity and inflation and came in 3 times higher than expected (0.65 vs est of 0.2).

Existing Home Sales: The October data was stronger than expected (5.48M vs est of 5.43M units). Supply continues to be very thin with only 3.9 months worth available. Six months worth of inventory is considered to be optimal. The median sales price fell -0.2% to 247K which a 5.5% gain from this time last year.

Leading Economic Indicators: The October release came in at double the market expectations (1.2% vs est of 0.6%), plus September was revised upward from -0.2% to +0.1%.

Durable Goods Orders: The Headline Preliminary October reading was weaker than expected (-1.2% vs est of 0.4%) but just one airplane order can skew that number. Overall, the report had some bright spots. Ex-Transportation, Durable Goods Orders increased by 0.4% which was inline with estimates of 0.5%. But offsetting that small miss was the fact that September's reading was revised upward from 0.7% to 1.1% which is significant.

The Talking Fed: Fed Chair Janet Yellen turned in her official resignation. She said she would stay on until the swearing in of the new Fed Chair Jerome Powell. However, the letter made it clear that she is resigning from the Fed completely and is not going to remain on the Board of Governors in another role. This is key because the board is short of voting members and her staying on in a different capacity was a consideration.

What to Watch Out For This Week:

By Taff Weinstein at

New Home Construction Data Shows Strong Market

New Home Construction Data Shows Strong Market
Two separate reports show that the housing industry is adding new supply to an inventory-strapped market and home builders are feeling good about it.

The U.S. Census Bureau reported that October New Housing Starts were stronger than expected 1.29M vs est of 1.19M and September was revised upward. Single Family Housing jumped 5.3% to 877K units. Building Permits also beat out expectations (1.297M vs est of 1.225M) and also saw an upward revision to the prior month.

Meanwhile, the National Home Builders Association reported that their Home Builders' Confidence shot up to an eight month high, rising 2 points to a reading of 70.   Any reading above 50.0 is positive and readings in the upper 60's and even low 70's is considered very robust.

"Demand for housing is increasing at a consistent pace, driven by job and economic growth, rising homeownership rates and limited housing inventory," said NAHB Chief Economist Robert Dietz. "With these economic fundamentals in place, we should see continued upward movement of the single-family housing market as we close out 2017."
Of the index's three components, current sales conditions rose two points to 77. Buyer traffic also increased two points to 50, which is the first time in six months that this component has been in positive territory. Sales expectations over the next six months fell one point to 77.
Sources: U.S. Census Bureau and National Association of Home Builders

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) gained +23 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower for the week.

Overview:  While the House did pass their version of Tax Reform, the Senate is still a very large uncertainty in the eyes of long-bond traders that are skeptical that they will have the votes to move forward.

Inflation?  The October Headline Consumer Prices Index YOY hit 2.0% vs est of 2.0%.  So, the 2.8% PPI rate did not flow through to consumer prices.  The more closely watched Core CPI YOY came in a tick higher than expected (1.8% vs est of 1.7%) but still remains below the 2.0% threshold.

The October Headline Producer Prices Index YOY hit 2.8% vs est of 2.4%.  It was 2.6% In September.  The Core reading (ex food and energy) YOY came in at 2.4% vs est of 2.3%.  Overall, a solid report but the markets will wait to see if it shows up in CPI

The Atlanta Fed Business Inflation Survey increased from 1.8% in October to 2.0% in November which is the highest reading since June.

Retail Sales: This data was better than expected.  The Headline October reading came in at 0.2% vs est of 0.0%.  But more importantly, the September data was revised higher from 1.6% to 1.9%.  Ex-Autos, Retail Sales gained 0.1% vs est of 0.2% but again, September was revised higher from 1.0% to 1.2%.

What to Watch Out For This Week:

By Taff Weinstein at

Bad Neighbors Can Cost You, Research Before You Buy

Bad Neighbors Can Cost You, Research Before You Buy:
Buying a home is one of the biggest investment any person will make in their lifetime. But how often do potential buyers do as much due diligence on their nextdoor neighbors as they do with, say, the decor in the bathroom or square footage in the yard?

Some 25% of home buyers said they regret not asking about their neighbors, while 30% said they wish they’d looked into the local sex offender database, according to a survey of 2,000 homeowners by mortgage-information site HSH.com.

Only 16% regretted that their home was too small. But roughly 40% of people said they’ve argued with their neighbor over noise, parking, kids, pets, danger to property and other landscaping issues, according to a separate survey of 3,000 people by real-estate site Homes.com released last year.

An annual online poll has ranked noise as No. 1 year after year. That includes barking dogs, loud music, car and house alarms and domestic arguments.
Barry Covert, a lawyer based in Buffalo, N.Y., recommends people research potential neighbors’ Facebook accounts, talk to local police, visit corner stores and local laundry services, and knock on the neighbor’s front door and find out for yourself. These steps make financial sense. And check online sex offender registries too: One study by Longwood College and Longwood University in Virginia said that registered sex offenders living nearby can reduce a home’s value by 9%, and homes near registered sex offenders can take 70% longer to sell.
Make sure the property line in the deeds of your future home matches with the actual property line, said Robert W. Zierman, a lawyer in Seattle. Few homeowners have heard of “adverse possession,” but it is the legal grounds on which a neighbor can claim “continuous, exclusive, open and notorious” use of your land if he or she has done so for a period of time. If there has been unlawful use of land for many years, the neighbor may be able to claim ownership in some states. Ask the seller for a written disclosure of all issues presented by neighbors over the years, Borzotta said
And the problem isn’t always nextdoor. “We who consider ourselves good neighbors need to realize we’re not perfect,” he said, “and that introspection, maturity and dignity are the best ways with which to handle neighbor conflicts as they arise.”

Source: Neighbors From Heck Online

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) lost -11 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly higher for the week.

Overview:  We had a very light week for economic data as there was not a single economic release that had the gravitas to move the needle on rates.  We also had a shortened trading session with the bond markets closed on Friday in observance of Veteran's Day.

The bond market focused on two key areas:  The Fed and Tax Reform.  Both gave the bond market more uncertainty.

The Talking Fed: N.Y. Fed President and FOMC Board Member William Dudley announced that he will be retiring a couple of  months early.  The term limits are for 10 years and he was slated to hit that in early 2019.  He said he would retire in "mid-2018" instead and that the exact timing will be determined by making sure that his replacement is all set before he leaves office.

Tax Reform:  The Senate Finance Committee Chair Orrin Hatch released the Senate's updated Tax proposal.  It had several key differences from the House Bill.

Here are the most notable highlights:
20% permanent corporate tax cut delayed by 1 year
Complies with the $1.5 trillion cost (will cost $1.44 trillion)
Preserves 7 tax brackets: top tax bracket is 38.5%, down from 39.6%
Doubles standard deduction from $12,700 to $24,000 (married couples)
Ends state and local tax (SALT) deduction; keeps business deduction
Keeps the mortgage Interest deduction cap at $1 million
Preserve the estate tax, doubling the current $5.49 million exemption for individuals
Raises the child tax credit to $1,650 from $1,000
Sets 10% tax rate for US companies with IP in foreign low-tax jurisdictions
Full expensing of capital investments for five years
Preserves 401(k)s IRAs,
Sets repatriation rate at 12% for liquid assets, 5% for illiquid assets
Carried interest loophole unchanged
Electric Vehicle tax credit is spared

What to Watch Out For This Week:

By Taff Weinstein at

Land, They Aren't Making More Of It, Or Are They?

Land, They Aren't Making More Of It, Or Are They?
Hong Kong is evaluating creating floating offshore communities to help with their housing crisis.  Sound far fetched?  Not really, considering many of our largest U.S. Cities like Chicago and Boston created land to expand their city's footprint.

But instead of using timbers, cement and land fill to expand the shorelines like in Chicago, Hong  Kong is considering a “floating community” formed of cruise liners, with its own community square, gardens, open-air theater and shopping malls, and taking a ferry to get to work in a downtown area.  It may sound futuristic, but a Hong Kong think tank has suggested this could be an efficient solution to the city’s housing shortage and sky-high property prices.

Each community would comprise 66 cruise ships connected to floating piers and a central deck, with each ship providing some 4,000 flats ranging from 183 sq ft to 549 sq ft.
Based on the construction cost of existing hotels converted from cruise liners and an assumed average living space of 192 so ft. per person, the cost per capita would be about HK$1.2 million.
Technologies have already been developed to support floating facilities, and many existing hotel projects such as the RMS Queen Mary in Long Beach in California proved that the project was feasible.
Source:  South China Morning Post
What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.50 MBS) gained +37 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move lower for the week.

Overview:  A very interesting and telling week.  If there was any question on what is the most important thing for long bond traders right now...we answered that question last week.  The answer?  Tax Reform.  We had a Fed Meeting - bonds did nothing, we had a new Fed Chair - bonds did nothing.  We had some of the strongest economic data that we have ever seen - bonds did nothing.  All three of those these would normally be very negative for bond trades (pushing mortgage rates higher).  But instead bonds traded higher (pushing mortgage rates lower).  Why?

Tax Reform: While both sides are debating the merits and impact of the tax cuts on individuals, the bond markets are focusing on Corporate Taxes.  The current proposal of a flat 20% corporate tax rate and a 12% rate on money brought back from overseas is very stimulative to our macro economic picture and would be something that bonds would not like.  However, even Republicans are balking at the changes to SALT deductions, the market sentiment currently is that this tax bill will not pass.  And that means no new stimulative reform to our economy and that is very bond friendly.

Manufacturing: The October ISM National Manufacturing Index was very strong, coming in at 58.7 vs est of 59.5. Any reading in the upper 50's is huge.  Prices Paid hit 68.5 vs est of 68.0
The October Chicago PMI was a block-buster!  It hit 66.2 vs est of 61.0.  Any reading above 50 is expansionary and a reading above 60 is rare and very robust.  New Orders were very strong and backlogs hit a 43 year high.
ISM Services:Was a blockbuster, breaking above 60.0 for only the 4th time in 27 years.  The October reading hit 60.1 vs est of 58.6.  This represents more than 2/3 of our economy.

Jobs, Jobs, Jobs:Big Jobs Friday!
We got a mixed bag with the jobs data with real strength in hiring but real wage pressure is once again evasive.

Tale of the Tape:
Non-Farm Payrolls (1st release) for October 261K vs est of 310K
September NFP (2nd release, one more revision to come) revised higher from -33K to +18K (51K swing)
August NFP (3rd and final release) revised higher from 169K to 208K (39K swing)
The more closely watched 3 month moving average is now 162K.
Average Hourly Wages MOM was flat at 0.0% vs est of 0.3%
Average Hourly Wages YOY increased by 2.4% which was at a slower pace than in September (2.8%).
The Unemployment Rate fell to 4.1% vs est of 4.2%.
The Participation Rate fell from 63.1% in September down to 62.7% in October.

The "Yawning" Fed:  They left their key interest rate and asset purchase program alone.
The Fed seemed slightly more positive (and perhaps hawkish) by upgrading the economy from growth "moderately" to "at a solid rate" even as it cautioned that "Gasoline prices rose in the aftermath of the hurricanes, boosting overall inflation in September; however, inflation for items other than food and energy remained soft."
Here are a few highlights from their statement:
Fed says economic activity rising at solid rate despite storms
Fed: inflation for items other than food, energy remained soft
Fed: storms unlikely to alter economy’s medium-term course
Fed: labor market continued to strengthen, unemployment declined
Fed: spending rising at moderate rate, investment picked up
Fed repeats market-based inflation compensation gauges still low
Fed repeats sees inflation stabilizing around 2% medium term

What to Watch Out For This Week:

 

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