MMG Weekly: Inflation Heating Up

Forecast for the Week: Look for important inflation, housing and manufacturing news. Plus, earnings season continues.

View: More and more people are listening to podcasts. Find out how they can help your business with the easy tips below.

The minutes from the Fed's June meeting of the Federal Open Market Committee showed that the Fed's Bond purchases will be contingent on how the U.S. economy does. Some members said further labor market improvement is needed, while several said a reduction in purchases would soon be warranted.

In terms of the labor market, regional and state unemployment rates were little changed in May. Twenty-five states had unemployment rate decreases, seventeen states had increases, and eight states and the District of Columbia had no change. And while the Jobs Report for June looked strong on the surface, when you dig into the report a lot of the jobs created were for low-paying jobs and part-time help. In addition, for the 18-29 year age group, the Unemployment Rate is a staggering 16.1 percent.

The labor markets are not out of the woods yet, and this is one of the reasons for continued stimulus from the Fed. In fact, on Wednesday Fed Chairman Bernanke tried to soothe the markets by stating that some of the easy money policies will be around for the foreseeable future due to high unemployment and inflation pressures remaining stable.

What does all of this mean for home loan rates?

Remember that the Fed's Bond purchase program has helped Bonds and home loan rates remain attractive. But the timing of tapering this program really does depend on whether the housing and labor markets continue to improve. In addition, with thousands of companies reporting their second quarter earnings over the next few weeks, the Fed will be watching closely. If numbers are reported at or below estimates for key sectors, the Fed may have to rethink the timeframe for tapering its Bond purchases.

Another key factor to monitor is inflation. Inflation at the wholesale level jumped by 0.8 percent in June, well above expectations, led by an increase in energy costs reflecting higher gasoline prices. Remember that inflation is the arch enemy of Bonds (and therefore home loan rates, which are tied to Mortgage Bonds) because inflation reduces the value of fixed investments like Bonds. Low inflation has given the Fed cover to continue its Bond purchases, but if inflation heats up, this could cause Bonds and home loan rates to worsen.

The bottom line is that home loan rates remain attractive compared to historical levels, and now remains a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.

• The week kicks off on Monday with Retail Sales.
• Look for two important manufacturing reports: the Empire State Index on Monday, followed by the Philadelphia Fed Index on Thursday.
• Tuesday we'll get a read on inflation at the consumer level with the Consumer Price Index.
• Gauges on housing will be reported on Wednesday with Building Permits and Housing Starts.
• Also releasing on Wednesday, the Fed's Beige Book, which gives information on current economic conditions in the Fed's twelve districts.
• Weekly Initial Jobless Claims will be reported as usual on Thursday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving -- and when they are moving lower, home loan rates are getting worse.

To go one step further -- a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Bond and home loan rates rallied last week. I'll continue to monitor their movement closely.

Websites, blogs and social media accounts require up-to-date content, but not everyone is comfortable writing or has the necessary budget to employ a skilled writer. Podcasting can help business owners bridge the gap, without requiring too much technical wizardry.

Here are the four steps to producing a basic podcast:

Rehearse: Podcasts are recorded digitally, so the audio is easy to edit. Even so, your podcast will be noticeably smoother, your delivery more interesting, and your thoughts will be easier to follow if you work from an outline and practice first.

Record: Cheap or free audio software will record, edit, and output the finalized audio file. Audacity is the most popular, but there are others as well. Note that if you want to add bumper music or other audio elements, make sure to get multi-track software. Most user manuals do a good job explaining how the software works, but if you still have trouble, users often post helpful walk-through tutorials on YouTube.

Consider using an external microphone instead of the built-in mic on your computer. Most mics these days are plug-and-play and your listeners will appreciate the higher audio quality. Here are a few mics to choose from.

Publish: Once your audio has been finalized, you need to upload it to a podcast host such as Libsyn or Podbean. Also, make sure to apply to have your feed posted on iTunes, which will expand your reach.

Promote: Now it's time to link your podcast feed across your website, blog, and social media accounts. Also notify your clients and contacts by email. Ask strategic partners to post your podcast on their website, and look for other ways to promote it locally. Don't forget to list it on your business card!

Feel free to pass these helpful tips along to your clients and colleagues.

Economic Calendar for the Week of July 15 - July 19