In This Issue

Last Week in Review: The highly anticipated Jobs Report for September is in. What was the news… and what does it mean for home loan rates?
Forecast for the Week: With the Meeting Minutes from the Fed’s last get together coming – as well as Retail Sales numbers, two inflation reports, and more Third Quarter earnings season ahead, a busy news week is in store!
View: Texting while driving has become a hot issue… but it doesn’t have to worry you anymore. Find out why below.
Last Week in Review

“EVERYBODY’S WORKING FOR THE WEEKEND….” (Loverboy, 1981) Or… are they? Unfortunately, many folks out there these days sure wish they were working at all… and the Labor Department reported last Friday that the US lost 95,000 jobs in September. What else did the Jobs Report say and what could the news mean for home loan rates? Read on for details.
A closer look at the Jobs Report for September shows that 159,000 of the jobs lost were government workers, many of which are the unwinding of the temporary census hires. The more important private sector added 64,000 jobs – but still not great, and also below the 74,000 expected. But this number confirms the thought that the economy, or the Job market, is stabilizing and perhaps even improving, albeit it at a very gradual pace. More on why this is so important in a minute.
The Jobs Report also showed that the Unemployment Rate remained at 9.6%, just below the 9.7% anticipated. However, it’s likely the actual rate of unemployment is higher. Why? Because if an unemployed individual does not seek employment for four weeks, they are removed from the count of the “officially unemployed.” And with unemployment benefits available for about 2 years, it increases an unemployed individual’s chances of becoming less motivated to look for a job, until the benefits are close to running out.
This can skew the headline Unemployment Rate, and is evidenced by the sharp rise in the overall unemployment rate or “U6” measurement of unemployment, which stands at 17.1%. The U6 rate accounts for these discouraged workers who have not sought employment for the past four weeks, as well as those who have accepted part-time employment but would prefer to be working full-time.
Now, back to the question of why signs of good – or bad – economic news are particularly important of late. The Fed will be watching the various economic reports very closely over the next few weeks in advance of their next regularly scheduled meeting on November 2-3, as they are considering a second round of Quantitative Easing (QE2) to ensure that our slowing economy does not slow even further. If the economic reports that are ahead are more negative than positive, this will increase the likelihood of more QE… but it’s not a foregone conclusion at this point in the least.
So what does all this have to do with home loan rates? If the economic news continues to be soft and the Fed does go through with another round of QE, Bond prices and home loan rates may initially improve for two reasons. First, if the economic data is weak leading up to an announcement – that soft economic news tends to be bad for Stocks, but good for Bonds and therefore home loan rates. Additionally, Bonds would improve simply because the announcement of QE would include large Bond purchases. But keep in mind that the key word is “initially.” Even though Bonds and home loan rates could initially improve, the eventual softening of the Dollar, rising commodity prices, and rise in Stock prices would become a drag on Bonds, which would negatively impact home loan rates.
We’ll see what happens in the coming weeks leading up to the Fed’s next meeting on November 2-3. But last week, meanwhile, the news had a positive impact on Bonds and home loan rates, as they ended the week about .125 to .25 percent better than where they began.
If you or anyone you know would like to learn more about taking advantage of historically low home loan rates, please don’t hesitate to call or email me as soon as possible. Or forward this newsletter on to anyone you think may benefit and I’d be happy to talk to them free of charge.
Forecast for the Week

It may be a short week in the Bond Market, with the market closed Monday for the Columbus Day holiday (the Stock Market will be opened), but there will still be plenty of news to work through. On Tuesday, we’ll get a look at the Minutes from the Fed’s September 21st Meeting, and these may give us even more information about which way the Fed is leaning in the QE department.
A double dose of inflation news ends the week, with the Producer Price Index on Thursday (which measures inflation at the wholesale level) and the Consumer Price Index on Friday. Remember, inflation is the archenemy of Bonds and home loan rates, so any hint that inflation is increasing could cause home loan rates to worsen.
Two other reports to note include Thursday’s Initial and Continuing Jobless Claims (last week’s report, while not great, was slightly better than expected) and Friday’s Retail Sales Report. In addition, third quarter earnings season kicks into full gear this week. Some reports to look for include JP Morgan Chase and General Electric, reporting respectively Wednesday and Friday before the markets open.
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 hit record levels as the talk of QE2 continued. I’ll be listening closely for the latest developments on that front this week.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday, October 8, 2010)

The Mortgage Market Guide View…

Safer Driving… There’s an App for That!
A recent study by the National Highway Traffic Safety Administration found that distracted driving was the leading cause in 448,000 accidents and 5,474 highway deaths in 2009. That represents a 16% increase from 2008.
That increase is one reason why U.S. Transportation Secretary Ray Lahood has proposed mandatory warnings in automobiles about distracted driving. Lahood, like many parents today, is concerned about the growing increase of technology use in automobiles – including distractions that are being added to new cars that allow “drivers to update Facebook, surf the Web or do any number of other things instead of driving safely,” Lahood said.
Even without such built-in technology, drivers today are often distracted by incoming text messages on their cell phones. The good news is that technology can also help solve this problem. New services – like DriveSafe.ly – have sprung up that eliminate the need to read text messages AND eliminate the need to respond.
Here’s how it works… You download an application to your phone. Then, when you get in your car to drive, you simply turn the application on. When you receive a text message, the application actually reads it to you… automatically… and out loud. So there’s no need to take your eyes off the road.
Better still… the application automatically sends a reply message stating that you are driving and will respond as soon as you reach a destination that allows you to safely reply.
The application can be used on a variety of phones and there are even different plans – including a free version of DriveSafe.ly as well as family and business plans.
If you receive a lot of text messages while driving or if you have a teenager of driving age, this could be one of the most important safety steps you do this year. Take a few minutes to check it out.
After all, this simple application could save your life or the life of someone you know.

Economic Calendar for the Week of October 11-15, 2010
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 October 11 – October 15
Date ET Economic Report For Estimate Actual Prior Impact
Tue. October 12 02:00 FOMC Minutes 9/21 HIGH
Thu. October 14 08:30 Jobless Claims (Initial) 10/9 449K 445K Moderate
Thu. October 14 08:30 Producer Price Index (PPI) Sept 0.2% 0.4% Moderate
Thu. October 14 08:30 Core Producer Price Index (PPI) Sept 0.1% 0.1% Moderate
Thu. October 14 08:30 Balance of Trade Aug -$44.5B -$42.8B Moderate
Fri. October 15 08:30 Empire State Index Oct 6.0 4.10 Moderate
Fri. October 15 08:30 Retail Sales ex-auto Sept 0.4% 0.6% HIGH
Fri. October 15 08:30 Retail Sales Sept 0.4% 0.4% HIGH
Fri. October 15 08:30 Core Consumer Price Index (CPI) Sept 0.1% 0.1% HIGH
Fri. October 15 08:30 Consumer Price Index (CPI) Sept 0.2% 0.3% HIGH
Fri. October 15 10:00 Consumer Sentiment Index (UoM) Oct 68.6 68.2 Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. 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, we do not make any representations as to its accuracy or completeness and as a result, 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.

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Certified Mortgage Planner, Curtis Schartz, home, Home loan, Interest Rates, kansas city, lees summit, overland park, Pulaski Bank, purchase, Refinance, shawnee



“HI HO, HI HO, IT’S OFF TO WORK WE GO!” And even those who have been feeling grumpy about the weak labor market found something to smile about last Friday. The official Jobs Report for November was released – and the improving numbers were a big surprise to the markets.

According to the Labor Department, only 11,000 jobs were lost in November, despite expectations of 125,000 jobs lost. As you can see from the chart below, this marks the least number of jobs lost in nearly two years – since December 2007. Adding to the favorable news, the Unemployment Rate improved to 10.0%, when expectations were for it to remain at the 10.2% level.

While the news was good for the economy and helped Stocks improve sharply, it wasn’t so favorable for Bonds…and as a result, home loan rates moved slightly higher on the news, continuing their worsening trend for the week overall.

Chart: 2009 Job Growth/Losses (In Thousands)
weekly112309Last Week in Review

In other news, based on early numbers, 195 Million shoppers hit the stores and websites on Black Friday, which was up from last year’s 172 Million. Cyber Monday – the online equivalent of Black Friday – also showed an increase in web shoppers, up by 6% from last year. It appears that the shopping traffic was up, but the dollars-per-shopper may be down a bit. This might be indicative of not only consumers being conservative…but also the fact that with all the deep sales taking place to incent buyers, fewer dollars may be spent to get the very same merchandise as a year ago.


Forecast for the Week

The week ahead starts out a bit sleepy in terms of economic reports, with no major releases due until Thursday when the Initial Jobless Claims report and the Balance of Trade report will both arrive.

Friday will bring another shot of economic news when the Retail Sales Report – the most-timely indicator of broad consumer spending patterns – is released. We’ll also get a look at the Consumer Sentiment Index for an updated snapshot of how consumers are feeling about the economy.

In addition to these reports, the markets will be watching the latest round of Treasury auctions. This week’s auctions include longer-term maturities such as 10-year Notes and 30-year Bonds that compete with Mortgage Backed Securities or Mortgage Bonds. So as we’ve been seeing of late, the auctions could cause some volatility, depending on how well they are received.

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, Mortgage Bonds hit a high for 2009 on November 27th, but traded lower last week due to financial news and a better-than-expected Jobs Report.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Dec 04, 2009)

The Mortgage Market View…

Budget-Friendly Decorating Tips

The holiday season is a costly time of year. There are gifts to buy, parties to prepare for, and any number of other miscellaneous expenses. One expense that can really add up is the money put toward holiday decorations. Here are some budget-friendly decorating tips that go easy on your wallet while also making your home look and feel beautiful.

The Nose Knows

We associate the holidays with certain scents. Pine, cinnamon, and cloves seem to top the list. If your family celebrates Christmas, you’ve most likely got the pine part covered with your fresh Christmas tree. If you don’t celebrate Christmas, or if you’re partial to an artificial tree, you can ask your local Christmas tree lot about the branches they’ve trimmed off of trees and have no use for. Freebees like these can be used to adorn mantles, decorate coffee tables, or may be tastefully strewn across a dining room table. They add a splash of color and a fresh pine scent without the presence of a tree.

Regarding the scent of either cinnamon or cloves, there are several ways to achieve it. Two of the easiest and least expensive methods are the use of potpourri and scented oils. Strategically place two or three such items around the house, and you’ll be immediately transported into the holiday mode.

Lighting Is Everything

The good news is that achieving the proper holiday lighting doesn’t require you to purchase any expensive fixtures. Instead, start with candles and lots of them. Candlesticks, votives, tea lights, and pillar candles all have the ability to create mood through incandescence. Candlelit dinners seem to look and taste better, and movie watching in a candlelit room adds ambience to the experience.

The bad news about candles is if you shop for them in the wrong place, you can rack up a hefty bill in no time at all. If you’re thinking about burning a lot of candles this holiday season, it can easily turn into one of those unnecessary expenses. For an array of inexpensive candles, look no further than your local Ikea store. If that’s not a possibility, simply log onto www.ikea.com and browse the nearly 100 different types of candles they have to offer.

Color, Color, Color

The holidays are all about color. If you celebrate Christmas, red, green, and white will serve as your color palate. If Hanukkah is your holiday, it’s all about blue, silver, and white. And if Kwanzaa is your celebration, look no further than red, green, and black. If none of these options work for you, there are always fall colors like brown, orange, and yellow.

Whatever your color choice may be, it is important to incorporate it into every room. Tablecloths and cloth napkins can provide the color in your dining room. In terms of the living room, pillows and throw blankets can serve as your holiday color accents. Even holiday gifts awaiting their opening can be wrapped in the appropriate colored paper. In terms of the rest of your home, be creative. Just make sure to utilize the colors that represent whatever holiday you are celebrating.

The Sound of Music

Music is decoration for the ears. Most of us have some sort of holiday-themed music somewhere in our collection. If not, pick up 3 or 4 compilation CDs that illustrate the holiday you are celebrating or look for 24-hour holiday-themed music stations through your cable or satellite service. Play these (on a lower volume) whenever you have a gathering in your home, or simply feel like getting into the spirit of the season.

But don’t stop there. Genres like soft jazz or classical music are also great to pipe into your living room during your gatherings. They add a soothing sophistication to any holiday event.

With just a little creativity, your home can look, smell, and sound just like you want it to this holiday season…without breaking the piggybank!

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 December 07 – December 11
Date ET Economic Report For Estimate Actual Prior Impact
Wed. December 09 10:30 Crude Inventories 12/4 NA 2.09M Moderate
Thu. December 10 08:30 Jobless Claims (Initial) 12/5 NA 457K Moderate
Thu. December 10 08:30 Balance of Trade Nov -$37.1B -$36.5B Moderate
Fri. December 11 08:30 Retail Sales Nov 0.5% 1.4% HIGH
Fri. December 11 08:30 Retail Sales ex-auto Nov 0.5% 0.2% HIGH
Fri. December 11 10:00 Consumer Sentiment Index (UoM) Dec 68.0 67.4 Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. 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, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

Contact Curtis Schartz, Certified Mortgage Planner at Pulaski Bank with any questions.
816-347-1678 x-307



Today’s interest rates for the Kansas City and Lees Summit Market are moving lower. There was a strong foreign participation in today’s 30 yr bond auction. With the well received auction Mortgage Backed Securities have rallied back today. Currently we have a floating bias as the Mortgage Backed Securities test resistance at the 25 day moving average. All in all this is good news for marginally lower rates. With all of the auctions over for the next couple of weeks we could see rates move a little lower. Stay tuned in this volatile market. The tide can change quickly. As your Certified Mortgage Planner with Pulaski Bank I will keep a watch on it for you.

Thanks – Curtis Schartz