The Mortgage Market this week 02/25/2008

Mortgage and Lending with US Financial Mortgage
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By Chad R. Beard
  Chad R. Beard
Branch Manager
US Financial Mortgage Corp.
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  Chad R. Beard  
For the week of Feb 25, 2008 --- Vol. 6, Issue 9
Last Week in Review

"AH SUGAR...AH HONEY HONEY" The Archie's made this the top song of 1969, and in fact, it was the only song recorded by a fictional band to ever reach #1. And like a child who has been overloaded on candy, Bonds have been "bouncing off the walls", and appear all "sugared up".

Bond prices and home loan rates swung wildly all of last week. Mortgage Bonds bounced around so dramatically, that home loan rates changed as much as a quarter percent during a single day, on two separate occasions last week. After all the exhausting action, home loan rates worsened by about .25% for the week overall.

Bonds hate inflation because over time, it erodes the purchasing power of the fixed of return they provide. And when consumer inflation was reported at its highest level in years, Bonds were hit hard. But some weak data on both Housing and Manufacturing, along with some sweet comments from the Fed, helped pour some sugar on Bonds as they rallied back and improved.

But wait...just when you thought the party was over, Mr. Excitement, Dallas Fed President and voting FOMC member Richard "Loose Lips" Fisher grabbed the stage. A known inflation hawk, who often blurts market moving comments in an almost uncontrolled fashion, "Loose Lips" lived up to his wild reputation by roiling the Bond market with warnings about inflation and the credit markets.


Forecast for the Week

If you like economic reports with the letter "P"...this is your kind of week. PPI, a measure of wholesale inflation will be reported along with PCE, which is the Fed's favored measure of consumer inflation. Additionally, GDP, and the Purchasing Managers Index will give us a look at the strength of the economy. Also in the mix are potential market movers like Durable Goods and Existing Home Sales.

A look at the chart below shows how the Bond has been bouncing off the walls of the 100 and 200-day Moving Averages. It is likely that this pattern will continue amidst all the economic data to be released. And because the range between these two boundaries is so wide, there will probably be more huge price swings ahead.

Chart: Fannie Mae 5.5% Mortgage Bond (Friday Feb 22, 2008) Japanese Candlestick Chart
The Mortgage Market View...


This year's flu season started out slow, but is now in full swing with widespread cases reported across the country. And it is far worse than expected...why? It appears that the scientists who try and predict the strains of the Flu that will be most damaging, failed to correctly predict the current version of the Flu that is wreaking havoc in homes and offices around the country. Most of the time, the scientists get it right, but this year's incorrect mixture is the reason that you or someone you know has been ill. Most cases aren't serious, but complications from the flu still claim around 36,000 lives each year in the US alone--and ten times that number worldwide.

How Can You Protect Yourself?

Normally, the simple answer is: get a flu shot. The Center for Disease Control and Prevention (CDC) is reporting that there is still plenty of flu vaccine available...and getting vaccinated now can still better protect you. But, as mentioned, this year's flu shot won't completely protect you because this year's flu vaccine is not a good match for two of the main strains going around. Experts still say it's still worth getting because it fully protects against half of the circulating flu viruses--and provides some level of protection against the rest.

If You Get the Flu, What Should You Do?

The flu is caused by a virus, so antibiotics and penicillin won't help cure it. The best advice is:

  • Get plenty of rest
  • Drink lots of liquids
  • Avoid alcohol and tobacco
  • Take over-the-counter medicine to help relieve the symptoms
  • Don't operate heavy machinery

Is Medical Attention Ever Necessary?

If you are 65 years or older, have a chronic medical condition, or are pregnant, you should consult a doctor as soon as you begin to feel the flu symptoms. People that fit these descriptions are considered special risk patients, in which case your doctor may choose to use specific antiviral drugs to help treat the flu. For everyone else, medical attention isn't usually necessary unless you see the following emergency warning signs:

  • High or prolonged fever
  • Difficult or irregular breathing
  • Near-fainting or fainting
  • Pain or pressure in the chest
  • Severe or persistent vomiting
  • Bluish skin tone
  • Confusion or extreme irritability
  • Flu symptoms improve only to return with a worse fever or cough

If you or someone you know experiences these symptoms, you should seek medical attention as soon as possible, either by calling your doctor or going to the emergency room.

Stop the Spread!

As a courtesy to others and to prevent spreading the flu, you should stay home from work, school, and even errands when you're sick. And remember... always cover your mouth and nose with a tissue when coughing or sneezing.

To view a report of flu cases in your state or across the country, visit and click on the drop down menu or link. You can also learn more about the flu symptoms and prevention at

The Week's Economic Indicator Calendar
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of February 25 - February 29

Date ET Economic Report For Estimate Actual Prior Impact
Mon. February 25 10:00 Existing Home Sales Jan 4.80M   4.89M Moderate
Tue. February 26 08:30 Core Producer Price Index (PPI) Jan 0.2%   0.2% Moderate
Tue. February 26 08:30 Producer Price Index (PPI) Jan 0.4%   -0.1% Moderate
Tue. February 26 10:00 Consumer Confidence Feb 83.0   87.9 Moderate
Wed. February 27 08:30 Durable Goods Orders Jan -3.5%   5.2% Moderate
Wed. February 27 10:00 New Home Sales Jan 600K   640K Moderate
Wed. February 27 10:30 Crude Inventories 2/23 NA   4204K Moderate
Thu. February 28 08:30 Jobless Claims (Initial) 2/23 355K   349K Moderate
Thu. February 28 08:30 GDP Chain Deflator Q4 2.6%   2.6% HIGH
Thu. February 28 08:30 Gross Domestic Product (GDP) Q4 0.7%   0.6% Moderate
Fri. February 29 08:30 Personal Income Jan 0.2%   0.5% Moderate
Fri. February 29 08:30 Personal Spending Jan 0.2%   0.2% Moderate
Fri. February 29 08:30 Personal Consumption Expenditures and Core PCE Jan 0.2%   0.2% HIGH
Fri. February 29 08:30 Personal Consumption Expenditures and Core PCE YOY NA   2.2% HIGH
Fri. February 29 09:45 Chicago PMI Feb 50.5   51.5 HIGH
Fri. February 29 10:00 Consumer Sentiment Index (UoM) Feb 70.0   69.6 Moderate

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only and is not intended for consumer distribution. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors.
As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.
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Comments (1)

Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

  We invite you back to ActiveRain in 2017. 

  We would welcome your return!

Sep 22, 2017 06:51 PM