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Raleigh Mortgages - The Martini Factor – Last Week…This Week (For the week of Jan 22, 2007)
Last Week
Last week's economic news should have been enough to make bonds and in turn  home loan rates make a move, but they didn't. A "flurry" (or if you prefer a wintery mix) of stronger than expected economic reports hit the streets, indicating a resilient economy. Strong economic news usually indicates good things for US businesses - which tends to push money out of Bonds and into the Stock market. We also know that strong economic data can point to higher inflation, which is the nemesis of bonds. So when money flows out of the Bond market, the value of Bonds fall - and since home loan rates are tied to Bonds, this in turn causes home loan rates to rise.
Here were some headlines from last week...the inflation measuring Consumer and Producer Price Indexes (CPI and PPI) both were hotter than expected, showing some lingering inflation in the economy; Housing Starts and Building Permits were both reported as better than anticipated; Initial Jobless Claims were lower than expected, indicating a strong labor market; the Philadelphia Fed Manufacturing Index was higher than estimated; and to top off the week, the Consumer Sentiment Index came in very strong - a three year high! ... more

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