June 5 2006

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For the week of Jun 05, 2006 --- Vol. 4, Issue 23

Last Week in Review

"YOU GOTTA BE CAREFUL IF YOU DON'T KNOW WHERE YOU'RE GOING, OTHERWISE YOU MIGHT NOT GET THERE." Yogi Berra Hmmm…wise words indeed from the legend of mixed metaphors, yet very appropriate for last week's mixed bag of news. The media, analysts, and the market at large continues to wonder if the Fed knows where they are going and if they'll know when they get there! Financial markets dislike uncertainty; and the likelihood of another Fed rate hike - or perhaps a pause - is the topic of great uncertainty and speculation. Last week's mixed news only helped fuel the fires of debate, but resulted in very little change to home loan rates overall. Let's take a closer look at the headlines. Wednesday brought the release of the Fed Meeting Minutes - the "Fed Unplugged" - the comments made between Fed members at the last meeting. The minutes showed Fed officials remain very worried over the prospects of ongoing inflation, but worse yet, also exposed wide differences of opinion among Fed members over whether or not they should have increased the Fed Funds Rate by 50 basis points at their last meeting…or whether they should have already paused! Then Friday brought a weak Jobs Report, showing only 75,000 new jobs added to the economy, where analysts had expected 170,000. But the Unemployment Rate did decline to 4.6%, which was the best since July of 2001. So is the economy hot…or not? The debate continues, and the news coming between now and the next Fed meeting on June 29th will continue to be analyzed heavily, as everyone attempts to outguess the Fed. TIRED OF PAYING A HEFTY FEE EVERY TIME YOU DIAL 411? WELL HERE'S SOME INFORMATION THAT YOU'LL WANT TO KNOW…YOU CAN NOW GET FREE 411! HOW? READ ON FOR THIS WEEK'S MONEY SAVING TIP IN THE MORTGAGE MARKET VIEW, AND FORWARD IT TO YOUR FRIENDS AND FAMILY TOO - THEY'LL THANK YOU FOR IT!

Forecast for the Week

So with all the uncertainty in the air - where do we go from here? After the past week's action packed news calendar, the week ahead holds few heavy hitting economic reports, and will give a welcome breather and a chance for some settling in the markets. Remember that all the economic news headlines and stray comments by Fed Governors are taking special significance, as everyone is trying to predict what the Fed might do next. Will rates be hiked once again, or will they finally pause…and what will the impact of their decision be? For the week ahead, unless more "loose lipped" Fed members slip out any volatile comments into the financial world, Bond trading and home loan rates will likely be driven by technicals. Market trading and therefore home loan rates are normally driven either by fundamentals, meaning economic news, reports and releases - or by technicals, meaning the analysis of chart patterns and indicators. And on a technical level, the chart below shows how Bonds have been stairstepping lower, meaning home loan rates have been on the rise. You can also clearly see how there is a strong technical ceiling of resistance overhead, meaning Bond pricing and home loan rates have been unable to improve from where they currently sit in well over a month. Since Bonds and home loan rates respond well to negative economic news, it would take quite a downer for them to power through this overhead ceiling and gain much improvement. In the absence of any big surprises this week, Bonds and home loan rates will likely stabilize and remain at current levels. Chart: Fannie Mae 6.0% Mortgage Bond (Friday Jun 02, 2006)

The Mortgage Market View...

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The Week's Economic Indicator Calendar

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise. Economic Calendar for the Week of June 05 – June 09 Date ET Economic Report For Estimate Actual Prior Impact

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only and is not intended for consumer distribution. 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, there is no guarantee it is not without errors.

As your trusted advisor, 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.