"Wild thing! You make my heart sing!" The Troggs.
And that song lyric is certainly an apt description for the
volatility in the markets these days, as the ups and downs have given
people things to
both sing and scream about. Here's what happened last
week...and how home loan rates were impacted.
Inflation news hit the wires, with reports on both the wholesale and
consumer levels. The wholesale-measuring Producer Price Index (PPI)
remained mostly unchanged during March. Remember, inflation
hurts the value of fixed investments like Bonds (including Mortgage
Bonds, to which home
loan rates are tied)...so the lack of inflation on the wholesale
side was good news for Bonds and home loan rates.
Also helping Bonds and home loan rates last week was the tame
inflation data from the Consumer Price Index (CPI). The headline reading
for March was
right in line with estimates. When stripping out volatile food
and energy, the Core CPI was also inline with estimates...but the
number was 2.3%, just slightly higher than the previous reading
of 2.2%. While this raises eyebrows a bit, the Fed is still reiterating
inflation remains subdued. That being said, if the Core CPI
continues to rise...which is indicative of inflation and as you can see
chart…Bonds and home loan rates will have a tough time improving
much further, regardless of other factors.
One key factor to keep an eye on is the labor market, as Initial
Jobless Claims increased 13,000 to 380,000 for the week ending April 7.
This marks the
highest level since January, and the second highest reading for
2012. The Fed has acknowledged that job creations are short of their
goals. In fact,
last week Federal Reserve Vice Chairman Janet Yellen said that
weakness in housing, the European debt crisis, and government spending
cuts are likely
to slow the pace of recovery and expansion. She did state that
the Fed has plenty of stimulus tools to use, if economic conditions
round of quantitative easing.
The bottom line is that many factors will impact the direction in which Bonds and Franklin TN home loan rates move in the weeks ahead. The good news is that Nashville TN home loan rates remain near historic lows and now continues to be a great time to purchase or refinance a Brentwood TN home. Let me know if I can answer any questions at all for you.