Napa Mortgage News

Presidents Day & Economic Data

March 6th, 2017 8:03 PM by Dale DiGennaro

Dear Gena,

It's Presidents Day 2017, a time to celebrate our nation's leaders, both past and present!

Strong Data

Based on the economic news over the past week, it would not have been surprising to see a large increase in mortgage rates. With stronger than expected economic data nearly across the board, hawkish comments from the Fed, and a stock market rally, the first half of the week indeed was rough on rates. Once all the news was out, however, mortgage rates recovered their losses and ended the week with little change.

Most of the reports on economic activity released

this week far exceeded expected levels. Excluding

the volatile auto component, retail sales doubled the

expected increase in January, and the December figures

were revised higher as well. Consumer spending accounts

for about 70% of economic output, and the retail sales

data is a key indicator.

Housing starts in January also surpassed expectations. The biggest surprises, though, were two regional manufacturing indexes which beat the consensus by a wide margin, one of which reached the highest level since 1984. In addition to these reports, the CPI and PPI inflation data for January came in above the expected levels. Increasing economic activity and rising inflation are not good for mortgage rates.

Early in the week, Fed Chair Yellen delivered her semi-annual testimony to Congress. Her comments were viewed as more hawkish than expected. Yellen stressed that it would be "unwise" to wait too long to raise the

federal

funds rate. She also said that in coming months the Fed will consider when to begin to reduce the Fed's portfolio of mortgage-backed securities (MBS). On the plus side, she pointed out that the Fed will do so very gradually. However, demand for MBS from the Fed has helped push down mortgage rates in recent years. The possibility of reduced demand put upward pressure on mortgage rates.

Looking ahead, the minutes from the February 1 Fed meeting will come out on Wednesday. These detailed minutes provide additional insight into the debate between Fed officials and have the potential to significantly move markets. Existing Home Sales will be released on Wednesday and New Home Sales will come out on Friday.

Mortgage markets will be closed today in observance of Presidents Day.

My daughter Jenae' competed in the "Jam National Cheerleading and Dance events in Las Vegas this weekend. Her Cheer team took first place in their coed division! She also did a solo dance routine.

American Canyon HS Cheerleading Team

We won!

Also coming up on Saturday, March 5th, is the Kiwanis sponsored 5K in conjunction with the Napa Marathon! You can get more information or register HERE.

"Thank you for always trusting in us to do the best for you and your family and please feel free to call me anytime you have questions. I will be happy to share with you whatever information you may need!"