Last week finally gave us a little good news on the job front. Both initial and continuing claims fell by substantial numbers for the week ending September 5. Initial claims showed the best numbers of 2009, and continuing claims fell by 159,000. Let's hope we see the same when the number are released this Thursday.
Another pleasant surprise came in the way of consumer sentiment, which showed a nice increase for the first part of the month. Which, by the way, continued the strong showing for the later part of August. Consumers will be the catalyst for ending the recession once and for all since consumer spending makes up 70% of GDP. We haven't seen this confidence translate into major increases in retail spending yet. But the markets are looking for positive trends and this has potential to show exactly that.
We have a busy, busy week of news ahead of us. Nothing of note was released yesterday but that will not be the case today. Starting off our Tuesday morning, we get the Producer Price Index (PPI) and Retail Sales. Remember the PPI is the inflation index at the wholesale level before being passed on to consumers, and this was down in July. August's numbers may be a little higher due to higher energy (gas) costs, but the core index shouldn't show much change. No inflation is good for interest rates :) Retail sales is the one to watch today. The market consensus is a minor increase from July to August, but if it comes in negative or less than expected, it could be a market mover.
The Consumer Price Index (CPI) will be released tomorrow and this will probably show a slight increase due to rising energy costs in August. But the year over year numbers are still very good and bode well for the rest of the year.
Housing Starts will be released Thursday and this has increased for five consecutive months, especially the all important single-family component. This report will could surprise though, because there is still a large inventory of existing homes, so this is a biggie to watch. And then of course, we get Jobless Claims. Look for a continuing of positive numbers here, regardless of how small.
I am still feeling positive about rates, though I am a little worried about a market correction. But I feel the positives outweight the negatives for the time being. Rates improved slightly last week (hovering around 5%), and I recommend floating all deals of 30 days or less.
Thanks for reading and I'll let you know if anything changes.
Have a great week!
Mike
Mike Haeffner
Certified Mortgage Planner
1st Preference Mortgage Corp.
Cell (410) 375-3868
Fax (301) 363-8510