Finance market update provided by Brentwood TN Real Estate for buyers and sellers in the Brentwood TN area.
Mortgage bond prices rose last week pushing mortgage interest rates lower, this is great news for Brentwood TN real estate buyers. The Fed took center stage with another rate cut exactly as expected and indicated "the committee expects inflation to moderate in the coming quarter." This statement helped bonds rally considerably. The majority of data released came in as expected with the exception of the employment report that was released Friday. Non-farm payrolls fell 20,000 in April, less than the expected decrease of 75,000. For the week, interest rates on government and conventional loans fell by about 3/8 of a discount point.
The preliminary productivity data Wednesday will be the most important event this week. Look for the Treasury auctions to provide an indication of foreign demand for US debt. Trade data Friday has the potential to result in market volatility so be cautious floating into the data releases.
Economic Factors
Economic Indicator Release Date Time Consensus Estimate Analysis
Preliminary Q1 Productivity Wednesday, May 7, 2008 Up 1.2% Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
10-year Treasury Note Auction Wednesday, May 7, 2008 None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Credit Wednesday, May 7, 2008 Up $6.3 billion Low importance. A significantly larger than expected increase may lead to lower mortgage interest rates.
30-year Treasury Bond Auction Thursday, May 8, 2008 None Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data Friday, May 9, 2008 $61.3 billion deficit Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates, leading also to increased buying power for Brentwood Tn Real Estate buyers..
Productivity
The latest advance gross domestic product data indicated the US economy grew at a 0.6 percent rate in the first quarter. Fed officials remain concerned that inflation is rising and the economy is heading towards recession. Many analysts believe the economy is already in one. This data was mixed with the GDP price index rising 2.6% in the first quarter compared to a 2.4% increase in the fourth quarter.
Productivity is the rate at which goods or services are produced. It is most commonly defined in terms of labor, which is the contribution of people to the process. Labor costs represent about two thirds of the value of the output produced. The Bureau of Labor Statistics of the US Department of Labor releases the most widely cited productivity statistics quarterly and annually. Increased productivity is often credited for economic growth with little signs of inflation.
Productivity is significant in that as it increases, businesses can produce more with the same or less input. This wealth building effect is vital to the US economy. As productivity increases, the US economy generally performs better. As productivity decreases, the economy generally suffers.
While the bond market generally favors signs of weakness in the economy, bonds tolerate growth as long as the economic environment shows little or no inflationary pressures. Unfortunately, inflation has escalated as of late.
Keep in mind that rates remain historically very favorable and now is a great time to buy your dream home in Brentwood TN or surrounding areas.
Now is a great time to avoid the uncertainty surrounding continued market volatility by locking your loan. Capitalizing on current levels is prudent to protect against future volatility.
*Information courtesy Tonya Esquibel, WR Starkey Mortgage, Franklin TN*
Vanessa Stalets
Brentwood TN Real Estate
RE/MAX Elite
615-957-6333/ 615-661-4400
