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Mortgage Market Guide: Inflation Was Hot. Find Out What Is Not.


In This Issue  

Last Week in Review: Inflation ticked up in November while Retail Sales slipped and new construction fell.

Forecast for the Week: Investment activity may slow down, but economic data will be full throttle.

View: How telling are your eye expressions in business communication?

Last Week in Review  

“How much is that doggie in the window?” Patti Page. Consumers pulled back on spending in November, but their costs ticked up.

MMG Weekly: Inflation Was Hot. Find Out What Is Not.

The Commerce Department reported that Retail Sales rose 0.1 percent in November, down from the 0.6 percent recorded in October (which was revised lower from 0.8 percent). Sales were up 3.8 percent from November 2015. The report showed that sales slowed in the first two weeks of the month but picked up again after the election heading into Black Friday.

Inflation is starting to trend higher at both the wholesale and consumer levels, upping costs for a variety of items. The Producer Price Index came in at 0.4 percent in November, hotter than expected. The Consumer Price Index for November was in line with expectations, though it is edging higher when compared to November 2015. Inflation is an important measure for home loan rates because it reduces the value of fixed investments like Mortgage Backed Securities. These are the type of Bond to which home loans are tied.

Both consumer spending and Inflation were important points for the Federal Open Market Committee as it wrapped up its final meeting of 2016 and announced an increase to the benchmark Fed Funds Rate by a quarter percentage point. The new rate range is 0.5 to 0.75 percent. This is the rate at which banks lend to one another overnight, and the increase does not directly influence home loan rates.

On the subject of housing, Building Permits and Housing Starts dropped in November. Building Permits were 4.7 percent below October and 6.6 percent below the same time last year. Permits for single-family units, however, were up 0.5 percent from October. Housing Starts, which measure when excavation begins on a home, were down 18.7 percent from October and down 6.9 percent from November 2015. November’s numbers could be a bit distorted to the downside as builders may have held back on projects ahead of the election. It’s important to note that one bad reading doesn’t make a trend, and I will be watching future reports closely.

If you or someone you know has any questions about the housing market, home loan rates or products, please don’t hesitate to contact me.

Forecast for the Week  
Trading volumes may diminish heading into the holidays, but economic data remains plentiful.
  • Housing data releases begin Wednesday with Existing Home Sales followed by New Home Sales on Friday.
  • Thursday is report-heavy with the final reading of third quarter Gross Domestic Product, Durable Goods Orders, Personal Income, Personal Spending and Personal Consumption Expenditures.
  • As usual, weekly Initial Jobless Claims also will be report Thursday.
  • On Friday, the Consumer Sentiment Index will be delivered.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, after leveling off for a short time, Mortgage Bonds took a dive recently. Despite the uptick in home loan rates, they still remain historically low.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Dec 16, 2016)
Japanese Candlestick Chart

The Mortgage Market Guide View…  

What Do Your Eye Expressions Say?

In any business environment, it’s important to be aware of communication signals you may be inadvertently sending. Your eye expressions, for example, can convey so much with little effort. Understanding that body language is often more about how people interpret your signals, rather than the actual intention behind them, is key. Here are five insights into how people may interpret your eye contact:

Narrowing your eyes is often an involuntary response when you’re concentrating. People can misinterpret this innocent response as anger, disagreement or harsh judgment, especially if you’re looking directly at someone. Practice keeping your eyes open and alert without raising your eyebrows.

Checking the clock is an innocent habit that will signal a lack of interest. Never let anyone think you don’t value their time, even if a meeting is going into overtime. Presence of mind shows you hold people in high regard, which has many business benefits.

Avoiding eye contact, can signal a confidence problem, undermine trust, and if you’re speaking, can convey you don’t have a full grasp of your subject. Correct this issue by occasionally making eye contact for just three seconds with those around you.

Maintaining strong eye contact can be perceived as an intimidation tactic. But the way you break eye contact is important. Looking to the side of a person’s head, rather than looking down, is best.

Rolling your eyes is always a communication killer. Even if you don’t value or agree with what’s being said or you are frustrated, rolling eyes can cause people to shut down, resulting in less information and not accomplishing tasks. Find less conspicuous ways to channel frustration, like pressing the pads of two fingers together.

Eyes aren’t the only communication tools at your disposal. Check out 20 more body language mistakes you could be making.

Please feel free to pass these helpful tips along to your team, clients and colleagues.

Source: American Express OPEN Forum

Economic Calendar for the Week of December 19 – December 23
MMG Weekly: Inflation Was Hot. Find Out What Is Not.



Questions, Comments or For more information you can call Christian Penner Branch Manager at Call/Text: (561) 373-0987 or email us at

Christian Penner Branch Manager | Cell/Text: (561) 373-0987

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Cell/Text: (561) 373-0987

Christian Penner
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Cell/Text: (561) 373-0987

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Mortgage Market Guide: Inflation Was Hot. Find Out What Is Not.

The Christian Penner Mortgage Team | Cell/Text: (561) 373-0987

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