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Monday, December 17, 2012

Inside Lending Newsletter From Theron Wall

 

 

Inside Lending from Theron Wall

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Theron Wall

Theron Wall
Sr. Mortgage Consultant
3767 Karicio Lane, Ste B
Prescott, AZ 86303
Office: 928.445.8730
Fax: 928.445.1065
Cell: 928.533.7473

Wallick & Volk Mortgage

For the week of December 17, 2012 – Vol. 10, Issue 51

 

Our hearts and prayers go out to the families and community of Newtown, Connecticut.

>> Review of Last Week

UNCERTAINTY TAKES ITS TOLL... There are just two weeks to go for politicians to broker a deal to stop the country from going over a fiscal cliff of draconian tax hikes and spending cuts. Unfortunately, Washington isn't proceeding with much urgency. Investors reacted poorly to the uncertainty as all three major stock indexes slipped for the week. Not helping things, the economic data was mixed, as inflation cooled and Industrial Production beat expectations, but Retail Sales missed consensus targets.

The big news came out of the Fed meeting on Wednesday. The Fed Funds Rate wasn't touched, but
the FOMC Committee announced it would now keep the Rate at these super low levels as long as unemployment stays above 6.5%. Most economists think that will be a very long time. To support this policy, once the current "Operation Twist" bond buying program ends, the Fed will start purchasing $45 billion worth of Treasuries each month, indefinitely.

For the week, the Dow ended down 0.2%, to 13135; the S&P 500 was down 0.3%, to 1414; and the Nasdaq was down 0.2%, to 2971. 


In spite of this week's Fed announcement, there was a bit of a sell-off in long term bonds. The FNMA 3.5% bond we watch ended the week down .08, at $106.15. Nonetheless, the Fed did signal that the measures they're taking to keep interest rates low will remain in place for a good long while. So national average mortgage rates stayed at or near record lows. The Mortgage Bankers Association reported demand for purchase loans gained for the fifth week in a row, up 9% over a year ago. 

DID YOU KNOW?
... Fiscal policy refers to decisions by the President and Congress about taxation and government spending. Economists explain that when taxes increase, more money goes to the government, so consumers have less to spend on goods and services to grow the economy and create jobs.

>> This Week’s Forecast

HOME BUILDING, EXISTING HOME SALES, MANUFACTURING, GDP, INFLATION... November Housing Starts are forecast down a little, although Building Permits are expected up for the month. Existing Home Sales should be up in November, inching ever closer to the 5 million mark. Manufacturing should look better, with the NY Empire and Philadelphia Fed Indexes both back in positive growth territory.

Thursday, the Third Estimate of Q3 GDP is predicted to remain at 2.7%, putting our economic growth just below where it needs to be. Friday's Personal Income and Spending are both expected up for November, with Core PCE Prices showing inflation still under control.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Dec 17 – Dec 21

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

M
Dec 17

08:30

NY Empire Manufacturing Index

Dec

2.0

–5.2

Moderate

W
Dec 19

08:30

Housing Starts

Nov

873K

894K

Moderate

W
Dec 19

08:30

Building Permits

Nov

876K

866K

Moderate

W
Dec 19

10:30

Crude Inventories

12/15

NA

0.843M

Moderate

Th
Dec 20

08:30

Initial Unemployment Claims

12/15

345K

343K

Moderate

Th
Dec 20

08:30

Continuing Unemployment Claims

12/8

3.192M

3.198M

Moderate

Th
Dec 20

08:30

GDP – 3rd Estimate

Q3

2.7%

2.7%

Moderate

Th
Dec 20

08:30

GDP Deflator– 3rd Estimate

Q3

2.7%

2.7%

Moderate

Th
Dec 20

10:00

Existing Home Sales

Nov

4.90M

4.79M

Moderate

Th
Dec 20

10:00

Philadelphia Fed Manufacturing Index

Dec

1.0

–10.7

HIGH

Th
Dec 20

10:00

Leading Economic Indicators (LEI) Index

Nov

–0.2%

0.2%

Moderate

F
Dec 21

08:30

Personal Income

Nov

0.3%

0.0%

Moderate

F
Dec 21

08:30

Personal Spending

Nov

0.3%

–0.2%

HIGH

F
Dec 21

08:30

PCE Prices – Core

Nov

0.1%

0.1%

HIGH

F
Dec 21

08:30

Durable Goods Orders

Nov

0.2%

0.5%

Moderate

F
Dec 21

09:55

U. of Michigan Consumer Sentiment – Final

Dec

74.0

74.5

Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months... Last Wednesday's Fed announcement told us they're tying a rate hike to employment targets, but economists don't expect to see those numbers any time soon. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:

Consensus

Jan 30

0%–0.25%

Mar 20

0%–0.25%

May 1

0%–0.25%


Probability of change from current policy:

After FOMC meeting on:

Consensus

Jan 30

     <1%

Mar 20

     <1%

May 1

     <1%

 

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

Tu
Dec 11

08:30

Trade Balance

Oct

–$42.2B

–$41.5B

Moderate

W
Dec 12

10:30

Crude Inventories

12/8

NA

–2.357M

Moderate

W
Dec 12

12:30

FOMC Rate Decision

Dec

0%–0.25%

0%–0.25%

HIGH

W
Dec 12

14:00

Federal Deficit

Nov

–$B

–$137.3B

Moderate

Th
Dec 13

08:30

Initial Unemployment Claims

12/8

382K

393K

Moderate

Th
Dec 13

08:30

Continuing Unemployment Claims

12/1

3.275M

3.287M

Moderate

Th
Dec 13

08:30

Retail Sales

Nov

0.2%

–0.3%

HIGH

Th
Dec 13

08:30

Retail Sales ex-auto

Nov

–0.2%

0.0%

HIGH

Th
Dec 13

08:30

Producer Price Index (PPI)

Nov

–0.6%

–0.2%

Moderate

Th
Dec 13

08:30

Core PPI

Nov

0.2%

–0.2%

Moderate

Th
Dec 13

10:00

Business Inventories

Oct

0.5%

0.7%

Moderate

F
Dec 14

08:30

Consumer Price Index (CPI)

Nov

–0.3%

0.1%

HIGH

F
Dec 14

08:30

Core CPI

Nov

0.2%

0.2%

HIGH

F
Dec 14

09:15

Industrial Production

Nov

0.2%

–0.4%

Moderate

F
Dec 14

09:15

Capacity Utilization

Nov

78.4%

77.8%

Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months... This Wednesday we'll see if the Fed says anything different about keeping the Funds Rate at super low levels "at least through mid-2015." Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:

Consensus

Dec 12

0%–0.25%

Jan 30

0%–0.25%

Mar 20

0%–0.25%


Probability of change from current policy:

After FOMC meeting on:

Consensus

Dec 12

     <1%

Jan 30

     <1%

Mar 20

     <1%

UIE 

This e-mail is an advertisement for Theron Wall. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is the property of Wallick & Volk Mortgage and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of Wallick & Volk Mortgage. BK 0018295 NMLS #256412



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MCID900139960

 

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