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Bay Shore Mortgage
Your Mortgage Resource
 
Provided to you Exclusively
By
John McNulty
 
John McNulty
Mortgage Consultant
Bay Shore Mortgage
Office: 858-720-6677
Cell: 619- 200-4532
Fax: 858- 683-2100
E-Mail: JKMBAYSHORE@GMAIL.COM
 
John McNulty
 
For the week of Apr 12, 2021 --- Vol. 19, Issue 15

A Look Into the Markets
 
































"So tonight I'm gonna party like it's 1999." ‒ "1999" by Prince

This past week the financial markets reacted to the Fed minutes from the March Fed Meeting. Heading into the release last Wednesday, the markets were on edge for three reasons:

  1. Would the Fed signal tapering of bond purchases?

  2. Would the Fed hint that rates will be hiked sooner than expected?

  3. Were inflation concerns elevating?

Well, market fears quickly turned to cheers as the Fed minutes reinforced that they are not "taking the punchbowl away" and they are not even thinking about raising rates or tapering bond purchases.

The main reason for the Fed's position? The minutes revealed that, "Participants noted that it would likely be some time until substantial further progress toward the Committee's maximum-employment and price-stability goals would be realized."

This line and more talk downplaying higher inflation fears longer-term allowed stocks to rally to all-time highs, while also allowing rates to also improve week-over-week.

On top of telling the markets the Fed will continue to buy bonds everyday to help keep rates low, they upped their growth forecast for the economy. They now forecast GDP to average 6.5% in 2021, up sharply from their 4.2% forecast just made in December.

The Fed also sees unemployment declining to 4.5% by year end, which is closer to the 3.4% low seen in February 2020, and they see inflation running at 2.2%, slightly above their target longer-term run rate of 2%.

The Fed is the most important thing to follow in the markets right now. When they are telling the markets they are not even "thinking about...thinking about" raising rates or tapering their bond purchases, this gives reason to "party like it's 1999."

What does it mean for you? Long-term rates like mortgages are not likely to move too high anytime soon.

This is a good story for millions who could still refinance as well as fuel continued opportunity in housing. Lastly, for new construction there is no pressure just yet to lock any of those.

Bottom line: Rates have improved week-over-week, and the trend may very well continue. However, like we experienced several weeks ago, any further rate improvement may be modest and short-lived. As economies reopen, we should expect rates to continue to increase further over time. So, if you or someone you know would like to talk about this incredible opportunity, please contact me.

Looking Ahead

The financial markets should continue to be driven by the Fed's easy monetary policy. Additionally, there are some potentially market-moving reports to follow next week, including the Consumer Price Index (CPI) for March. Inflation will creep up over the next few months as year-over-year energy prices have soared but should level off as the Fed has forecasted.


Mortgage Market Guide Candlestick Chart
 

Mortgage-backed security (MBS) prices are what determine home loan rates. The chart below is the Fannie Mae 30-Year 2% Coupon, where current closed loans are being packaged. The right side of the chart shows prices continuing to trade sideways to higher, meaning rates are also modestly improving.

Chart: Fannie Mae 2.0% Mortgage Bond (Friday Apr 09, 2021)
Japanese Candlestick Chart
 

Economic Calendar for the Week of April 12 - April 16

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. April 13
08:30
Consumer Price Index (CPI)
Mar
0.5%
0.6%
0.4%
HIGH
Tue. April 13
08:30
Core Consumer Price Index (CPI)
Mar
0.2%
0.3%
0.1%
HIGH
Wed. April 14
02:00
Beige Book
Apr
NA
 
NA
Moderate
Thu. April 15
08:30
Empire State Index
Apr
16.25
 
17.4
Moderate
Thu. April 15
08:30
Philadelphia Fed Index
Apr
41.3
 
51.8
Moderate
Thu. April 15
08:30
Retail Sales
Mar
4.7%
 
-3.0%
HIGH
Thu. April 15
08:30
Retail Sales ex-auto
Mar
3.0%
 
-2.7%
HIGH
Thu. April 15
10:00
Housing Market Index
Apr
84
 
82
Moderate
Fri. April 16
08:30
Building Permits
Mar
1.750M
 
1.682M
Moderate
Fri. April 16
08:30
Housing Starts
Mar
1.613M
 
1.421M
Moderate
Fri. April 16
10:00
Consumer Sentiment Index (UoM)
Apr
88.6
 
84.9
Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. 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, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

As your mortgage professional, 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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John McNulty
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Ste. 201
Del Mar, CA 92014

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