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In This Issue…

I hope you and your family enjoyed the Independence Day holiday weekend. And, I sincerely hope you have been enjoying your complimentary subscription to the MORTGAGE MARKET GUIDE WEEKLY.

Due to the July 4th holiday, the next full issue will arrive on Monday, July 11. In the meantime, check out the fun facts below about America.

And if any of your clients, friends, family members, or associates would benefit from keeping up to date on market and economic trends with my easy-to-read Mortgage Market Guide Weekly newsletter, please let me know and I’ll be more than happy to add them free of charge.

The Mortgage Market Guide View…

As we celebrate the founding of the United States, it’s an ideal time to reflect on some fun facts from the US Census Bureau.

America Then and Now

The number of people living in the newly created United States back in July 1776 totaled 2.5 Million people. This 4th of July, the number of people living in the US is estimated at 311.7 Million.

Flags Unfurled

Did you know that $3.2 Million worth of American flags were imported in 2010? Perhaps more surprising is that $486,026 worth of American flags were exported, with Mexico being the leading customer of those flags.

Rockets’ Red Glare

More than $230 Million worth of fireworks and pyrotechnics are shipped by US manufacturers each year.

Lady Liberty

More than 31 places have the word "Liberty" in their names; the most populous is Liberty, Missouri with nearly 30,000 people.

Patriot-ism

Unlike the word "Liberty," the word "Patriot" is rare in town or city names. In fact, according to the Census Bureau, there’s only one place with the word "Patriot" in its name, and that’s Patriot, Indiana, with 209 residents.

Best wishes to you on this special time of summer. And please contact me if I can be of any help.

Economic Calendar for the Week of July 04 – July 08

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In This Issue…

Last Week in Review: Important economic indicators moved up and down. Find out what they mean to Bonds and home loan rates!

Forecast for the Week: Multiple high-impact reports will be released this week. Here’s what you need to know!

View: Does grad school really pay off in today’s economy? The answer below may surprise you!

Last Week in Review

"WHAT GOES UP… MUST COME DOWN?" Gas prices have dropped at the pump lately, but the markets are more focused on movement in the rest of the economy. Here’s a look at where some important economic indicators are headed… and what they mean to you!

Fill ’er up… oil’s down! Late last week, crude oil fell under $90 per barrel after the International Energy Agency (IEA) said it would release 60 Million barrels of oil in the coming months to offset the loss of production in Libya.

Lower expectations for economic recovery. The big news last week was the Fed FOMC meeting and the release of the Fed’s Policy Statement. While there weren’t many surprises to come out of the meeting, the Fed did revise its forecast for the 2011 Gross Domestic Product (GDP) lower and acknowledged that the economic recovery is a little slower.

Frustratingly high. On Unemployment, the Fed stated that the pace of job growth is "frustratingly slow" and that it believes the Unemployment Rate will average 8.6% to 8.9% in the 4th quarter of 2011…which is actually higher than earlier forecasts of 8.4% to 8.7%.

Inflation on the rise? The Fed also raised expectations for Core Inflation, which strips out volatile food and energy costs. This is important because if inflation picks up, Bond prices will move lower – since yields have to move higher to attract buyers to compensate them for the pickup in inflation. And that means home loan rates may move higher as well.

Where are Stocks headed? The Fed said the second round of Quantitative Easing (known as QE2) will end as scheduled at the end of June – but there was no mention of a third stimulus package (which would be known as QE3). Their silence on this point was fairly deafening. Many experts have wondered about the possibility of a third round of QE, but it doesn’t look to be in the cards at this point. It’s important to note that the Stock market did not like that there was no mention of QE3, especially since Stocks have only risen the past couple of years when the Fed has been buying – like during both QE1 and QE2. It will be very interesting to see how Stocks behave once the QE2 support is removed.

Misery loves company? Here’s an interesting fact for you. Believe it or not, there’s actually a "Misery Index." This Index takes into account both inflation and the Unemployment Rate. Currently, it’s just slightly below the level seen in December 2009, which is when the economy was still in the midst of the credit crisis. To put this in perspective, we haven’t seen the Misery Index this high since 1983. And what is a bit concerning is that the Index has climbed higher each month so far during 2011. With inflation rising higher still and unemployment not ticking down, the upward trend may well continue in the near future.

Better than expected… but what’s the catch? Durable Goods were reported better than expected last week. It wasn’t a blockbuster reading, but it was good news in light of concerns that the economic recovery is slowing. That said, there’s a catch to consider if you or someone you know is looking to refinance or purchase a home. The recent slowdown in the economic recovery has actually helped improve Bonds and home loan rates. But if the slowdown proves to be just a minor bump in the road to recovery and if future reports show modest improvements, home loan rates could move higher rather quickly.

The good news is that home loan rates are still at historical lows, making this a terrific time if you or someone you know might be thinking about refinancing or purchaing a home. It only takes a few minutes to see if you can benefit from the situation. Call or email to get started.

Forecast for the Week

Another busy week is ahead of us, especially with the release of multiple high-impact economic reports, not to mention Treasury Auctions:

• We start off right away Monday morning with reports on Personal Spending and Personal Income, as well as the Personal Consumption Expenditures (PCE) Index, which is the Fed’s favorite gauge of inflation.
• In addition to seeing new data on consumer spending and income, we’ll also see new reads on how consumers feel about the economy. On Tuesday, the Consumer Confidence report will be released, followed by the Consumer Sentiment Index on Friday.
• Manufacturing will also be in the news this week. On Thursday, we’ll see the Chicago PMI, which surveys more than 200 Chicago purchasing managers about the manufacturing industry and is a good indicator of overall economic activity. Then on Friday, we’ll see the ISM Index, which is considered the king of all manufacturing indices and the single best snapshot of the factory sector.
• The housing industry will also be highlighted this week, with the release of Pending Home Sales report on Wednesday.
• Finally, on Thursday the markets will see a new read on the weekly Initial Jobless Claims report. In last week’s report, the number of new Jobless Claims rose significantly to come in higher than expected. Overall, the pain in the job market continues to weigh on the economy and the quandary for the Fed is that further government stimulus or support may be warranted if things slow down further. But with more government stimulus comes further inflation fears – and since inflation is the archenemy of Bonds and home loan rates, this will be an important news story to keep watching.

In addition to those reports, the Bonds and home loan rates may also be impacted by the Treasury Auctions this week. The Treasury Department will auction off a total of $99 Billion in 2-, 5- and 7-Year Notes on Monday, Tuesday, and Wednesday. I will watch those auctions closely to see how they’re received and how they impact home loan rates early in the week.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bonds and home loan rates benefited from the news last week. I’ll be watching closely to see if the slower economic recovery continues… and how this week’s news impacts home loan rates.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jun 24, 2011)

The Mortgage Market Guide View…

Does Grad School Pay Off?

We look at how much you’ll make – and how much you’ll owe – after earning advanced degrees in five popular fields.

By Jane Bennett Clark, Kiplinger.com

A few years ago, going to graduate or professional school seemed like a smart way to wait out a miserable economy. Students who picked up an extra degree may now be wondering if it was worth the time and expense.

In terms of salary expectations, the answer is yes. The Census Bureau reports that workers with a master’s degree earn an annual $74,217, on average, compared with $58,762 for bachelor’s degree recipients and $32,812 for high-school-only graduates. Grads who earn doctoral degrees can earn salaries in the six-figure territory. Professional degrees bring in an average of $128,578.

But the average grad-school debt for students who borrow tops $30,000 for a master’s degree and approaches $90,000 for a professional degree, not including undergraduate loans.

If your monthly payment exceeds 10% of your monthly income, you could end up struggling financially for the sake of that degree. Vet the prospects for your profession before spending (or borrowing) to go to graduate school.

Law degree

New hires of law-firm associates, which plummeted 40% in 2009 from the previous year, are creeping back up. More than 87% of law students who participated in law-firm summer programs were offered jobs in 2010, an 18% bump over 2009, according to the National Association for Law Placement. Still, hiring remains significantly below prerecession levels, and competition for jobs will be fierce as law schools continue to churn out more lawyers than the market can bear. As for salaries, the biggest paydays are at big private firms, where new lawyers earn a median annual salary of $160,000. Public-interest attorneys earn the least, with median starting salaries of $42,000 to $50,000, according to the NALP.

Medical degree

The medical profession suffered its share of economic heartburn in the aftermath of the recession: In 2010, doctors in eight specialties, including plastic surgery and gastroenterology, saw a drop in pay from the previous year, and most others enjoyed only a modest increase. No worries: Physician incomes are still among the highest in the country, ranging from $175,000 to $600,000, depending on the specialty. And job prospects for physicians will be healthy throughout the decade, owing to an aging population and ongoing demand for high-level care. The most sought-after of the profession (but not the highest-paid): doctors who practice in rural and low-income areas and those who specialize in age-related illnesses.

Doctor of Pharmacy

Take regular breakthroughs in medicine, a shortage of new pharmacists, and a host of older pharmacists getting ready to retire and you’ve got a prescription for job opportunity. Although some pharmacists saw their hours cut back or their schedules rejiggered during the recession, job growth for pharmacists will approach 20% over the decade ending in 2018, according to the Bureau of Labor Statistics. The average salary for the profession, which currently requires a doctoral degree, is $106,630. If you go into this field, plan on spending less time mixing medications – most are premeasured and delivered ready-to-use by pharmaceutical companies – and more time counseling patients and filling out insurance forms.

MBA

Employment prospects for MBA grads rebounded after suffering a dip in 2009: Nine in ten members of the class of 2010 were employed after graduation, about the same as prerecession levels, according to the Graduate Management Admission Council. But getting those offers was no walk in the office park: Grads sent out more than 33 applications, on average, and submitted to more than six interviews before getting a bite. Nearly half of the class reported applying for jobs that offered less money than they had hoped for. As for the future, job growth for business management analysts over the decade should be strong, and so should the competition among job seekers. Many firms won’t even look at a candidate who lacks an MBA.

Master of Public Health

Public-health professionals should find plenty of jobs in the coming years as the health care industry expands, the federal government ramps up disaster-preparedness efforts, and communities seek to improve preventive care. Specialties with the most job potential include health services administration, epidemiology, health education and public-health program management, at first-year salaries (which include all degree levels) ranging from $33,000 to $86,625 for health education and $37,050 to $161,400 for health services administration. The median for health service management runs $80,240. Most public-health management positions require a master’s degree, such as a master of public health or health administration.

Reprinted with permission. All Contents ©2011 The Kiplinger Washington Editors. www.kiplinger.com.

Economic Calendar for the Week of June 27-July 1, 2011

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 27 – July 01

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In This Issue…

Last Week in Review: Events in Greece and inflation news made for a volatile week, but how did home loan rates fare?

Forecast for the Week: A full week of reports is ahead, which will give us news on housing and the state of the economy. Plus, the Fed meets Tuesday and Wednesday.

View: Planning to travel this summer? Check out these tips from Kiplinger.com on ways to save.

Last Week in Review

"Greece is the word." Last week, both renewed problems in Greece and inflation news dominated the headlines and made for some volatile trading. What happened, and what was the impact on home loan rates? Read on for details.

In Greece, the riots continued as people protested further pay cuts and tax increases to help close their unsustainable budget deficit. Then on Friday, Greece announced some reshuffling within their Parliament and it also appears as though the country will receive some sort of bailout to meet near-term financing needs. With 20,000+ people rioting in the streets, the government had to do something to calm the markets, but the Greece story is far from over.

Shaking up the Parliament won’t fix the long-term debt problems, nor is it likely that a short-term bailout, if it happens, will help Greece avoid some sort of debt restructuring, re-profiling or outright default. One impact of the volatility in Greece is that it has caused some flight to safety buying of US Dollar denominated securities like Treasuries and Mortgage Backed Securities, upon which home loan rates are based. This helped Bonds and home loan rates last week, which was a good thing, since signs of inflation also heated up last week and Bonds and home loan rates would have likely worsened on that inflation news.

Remember, inflation is the arch enemy of Bonds and home loan rates, like Kryptonite to Superman, because inflation erodes the value of the fixed return provided by a Bond, which causes home loan rates to rise. And last week, both the Producer Price Index (which measures inflation at the wholesale level) and the Consumer Price Index (CPI) were both reported hotter than expected, with the Core CPI rising by 0.3%, which was the largest monthly increase in three years. While the Fed continues to say that the increase in inflation is transitory (i.e. short in duration, temporary or not persistent), more signs of inflation in the coming weeks and months could hinder Bonds and home loan rates from further improvements.

The bottom line is that home loan rates still remain near some of the best levels we’ve seen this year, and it’s important to take advantage of these levels while they remain. If you have been thinking about purchasing or refinancing a home, call or email me to learn more about why now is a great time to benefit from today’s historically low rates. Or forward this newsletter on to someone you know who may benefit.

Forecast for the Week

Another full week of economic reports is ahead. Look for:

• A double does of housing news with Tuesday’s Existing Home Sales Report and Thursday’s New Home Sales Report.
• The regularly scheduled Federal Open Market Committee meeting on Tuesday and Wednesday. Given last week’s hotter than expected inflation news, will the Fed still say inflation is transitory?
• Thursday also brings another weekly Initial and Continuing Jobless Claims Report. Last week’s Initial Jobless claims fell 16,000 to 414,000 and while the decline is good news, this is the tenth straight week that Jobless Claims have remained back above the 400,000 level.
• Rounding out the week on Friday are two important reports on the state of the economy: Durable Goods Orders, which gives us an update on consumer and business buying behavior on big-ticket items, and Gross Domestic Product, which is the broadest measure of economic activity.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bonds and home loan rates traded sideways last week, with inflation news keeping market improvements from the instability in Greece in check. I’ll be watching closely to see how world events and economic reports impact the markets this week.

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Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jun 17, 2011)

The Mortgage Market Guide View…

What You Need to Know About Summer Travel

Whether you fly or drive, it’s going to cost more to get there. But you can save on lodging, food and entertainment.

By Susannah Snider, Kiplinger.com

1. Take a bite of the Big Apple. "People know about beach-house rentals. But renting a place in the city can also pay off," says Alexis de Belloy, of HomeAway.com. You can cook meals at home and use on-site laundry facilities — which means you can downsize your luggage and side-step baggage fees. HomeAway recently listed a two-bedroom, one-bath apartment, which sleeps six, in midtown Manhattan for $275 per night in mid July; the minimum stay is four nights.

2. Rent a cabin in the woods. Accommodations at national and state parks can run the gamut from luxurious lodges, such as the Ahwahnee in Yosemite ($590 for a weeknight in mid July), to cozy cabins in the woods. Recently, a cabin that sleeps six in Letchworth State Park, in upstate New York, went for $344 per week (the minimum stay during the summer).

To book a room in a lodge in one of the national parks, go to Xanterra.com; for other options, such as campsites and cabins, go to www.nps.gov. And for lodging close to home, browse your state government Web site.

3. Take a mini vacation. Looking for a quick getaway? Adding a Thursday or Sunday night to a Friday-Saturday stay could slash your overall hotel room rate by as much as 20% to 35% per night, says Bob Diener, of GetARoom.com. Of course, you might save up to 60% off published prices at a name-your-own-price Web site, such as Priceline, as long as you’re prepared to book the room before you know the hotel.

4. Groupon on the road. Using group-discount sites on vacation can trim 50% off your entertainment and food bills, says Anne Banas, of SmarterTravel.com. Register for new accounts, or change your location settings on existing accounts, a few weeks before you take off. Banas also recommends doing a search for "restaurant weeks" plus your destination, visiting Goldstar.com for event tickets, and dropping by the local visitors bureau to scoop up extra discounts. Not visiting a major city? Check out state-sponsored Web sites, such as VisitFlorida.com, for discounts. And if you’re a member of AAA or AARP, don’t leave your membership card at home.

5. There is such a thing as a free breakfast. Rick Ingersoll, of FrugalTravelGuy.com, says that a complimentary breakfast in an expensive overseas location can cut his food bill in half. He eats one big meal late in the day in addition to breakfast, and snacks on store-bought food in-between. Many domestic hotel chains offer free breakfast, too. At Holiday Inns in the U.S. and Canada, kids under 12 eat gratis any time of day, and children under 19 stay free. Plus, summer is a great time for free summer concerts and local foodfests — such as Chicago’s Grant Park Music Festival and the Taste of Chicago — so check local Web sites for schedules.

6. Stretch your money overseas. XE.com has a currency converter that lets you see how the dollar is performing against the local tender. Ingersoll’s top three value destinations are Cambodia, Poland and Thailand. Diener recommends you pay for reservations in advance in U.S. dollars to hedge against currency fluctuations. "The worst thing is when you get there and the hotel bill is $50 more," he says.

Reprinted with permission. All Contents ©2011 The Kiplinger Washington Editors. www.kiplinger.com.

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Economic Calendar for the Week of June 20-24, 2011

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 20 – June 24