In This Issue




Last Week in Review: Big Jobs news was reported, plus the uncertainty out of Europe continued.

Forecast for the Week: The economic calendar is light, which means news out of Europe could make it a volatile week in our markets.

View: There’s a great holiday gift that doesn’t cost a dime. Check out the details below.


Last Week in Review




It’s been said that “slow and steady wins the race.” And when it comes to the Jobs Report for November, it seems that the labor market continues to improve at a gradual pace. Read on for the details…and what they mean for home loan rates.

There was good news, as the headline number for job creations in November came in at 120,000, with 140,000 private jobs offsetting government losses. What’s more, some upward revisions to the two previous readings added 72,000 more jobs than had been reported.

Perhaps even more important, Hourly Earnings grew by just 0.1% – a number that suggests no threat of wage-based inflation. Remember, inflation is the arch enemy of Bonds and home loan rates because when inflation rises, investors in Bonds demand a higher yield to offset the lost buying power inflation imposes on a fixed payment. And as home loan rates are tied to Mortgage Bonds, this would mean home loan rates move higher. So the Hourly Earnings number was good news for Bonds and home loan rates.

Catching the markets by surprise was a rather sharp decline in the unemployment rate to 8.6%, the lowest unemployment rate we’ve since March of 2009. While this is good news on the one hand, part of the decline stems from the fact that 315,000 people were removed from the workforce because they totally gave up looking for work. And with 13.3 million Americans still out of work, more improvement is certainly needed here.

Similarly, the labor participation rate (which is currently hovering at a 30-year low at 64) needs to move above 66 or it will be difficult for the economy to grow fast enough to lower our budget deficit. In fact, last week Bond ratings firm Fitch issued a stern warning to the US, saying that our AAA rating will be in jeopardy if we don’t soon do something to rein in our own ever-growing budget deficit.

It is good news that we’re seeing some slow and steady improvement in the labor market…and coupling this with other recent positive economic signals, means we are not near a recession at the moment. But our economic health remains fragile, and any external shock from Europe could easily disrupt the economic improvement we are seeing.

The bottom line is that the uncertainty out of Europe – and the prospect of additional Mortgage Bond buying (QE3) from the Fed – should continue to support Bonds and home loan rates as they will benefit from investors looking for a safe haven for their money. However, it is also unlikely that Bonds and home loan rates will improve much further. Inflation, while not yet a problem, is still elevated…and if it continues to creep higher, this will limit any improvement home loan rates may see. With home loan rates still near historic lows, now remains a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.


Forecast for the Week




In the absence of data and with earnings season over, Stocks and Bonds will battle over investing dollars and trade off the geo-political headlines out of Europe.

  • The ISM Services Index will be reported on Monday. This report gives investors a gauge as to how the service sector is holding up in this economy. Individuals employed in this sector produce services rather than products. Service sector jobs provide a significant number of jobs in the US – including housekeeping, messenger services, tax preparation, nursing and teaching.
  • Weekly Initial Jobless Claims will be delivered on Thursday. This week’s report comes after last week’s report showed that claims rose above the 400,000 level for the first time in four weeks.
  • Consumer Sentiment will be delivered on Friday to cap off the week.

In addition to that news, here’s something to keep an eye on in the weeks ahead. Stocks may be set for another jump. That’s because of something that’s become known as the “Santa Claus Rally.” The Santa Claus Rally is usually a surge in Stocks in the week between Christmas and New Years.

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 are being supported by rumors of QE3 and the continued certainty out of Europe. I will continue to watch these developments in the weeks ahead.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Dec 02, 2011)



The Mortgage Market Guide View…




Holiday Spending Without an Extra Cent

Time is a precious commodity, but it’s even more treasured because it is fleeting. As soon as a day, an hour, or even a minute passes, it is gone forever.

While that might be stating the obvious, it’s an important concept to reflect on during the often-hectic holiday season. So this holiday season – regardless of which holiday you celebrate or if you celebrate any – remember to focus on and spend time with the people around you, including family, friends, and even coworkers or clients.

When TV personality and kid expert Art Linkletter was asked about the idea of spending time with loved ones this is what he said:

“I once asked a five-year-old what he would take with him if he were going to Heaven. He replied, ‘I would take my parents because I think that up there they would have more time with me’… nuff said.”

The good news is, it’s actually possible to slow time down in a way that seems to lengthen special events like a day of fishing with your child or a special dinner with a good friend. The key is to consciously honor the person and the event as you experience it. To be in the moment.

In the days and weeks ahead, remember to recognize the people you care about. You don’t need to do or say anything specific, nor do you need to spend any money. You simply need to spend time with them. So consider setting aside two hours one day for coffee with a friend. Or if you have children, make special plans to take each one out individually for their own dinner. You can even set aside a short amount of time each day to call some of your special clients to see how they’re doing and personally wish them a happy holiday. And when you do, avoid distractions like technology or worries about what else you need to do that day.

After all, once the moment passes, you can go back to that checklist of things to do. But you can never go back to that moment in time.

Economic Calendar for the Week of December 05 – December 09



Economic Report






Mon. December 05


ISM Services Index






Thu. December 08


Jobless Claims (Initial)






Fri. December 09


Consumer Sentiment Index (UoM)








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Certified Mortgage Planner, Curtis Schartz, Home loan, Interest Rate, Interest Rates, kansas city, lees summit, lower interest, lower rates, Mortgage, mortgage backed securities, no cost refinance, overland park, Pulaski Bank, purchase, rate, Rates, Refinance, shawnee

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