MMG WEEKLY – WHAT ARE THEY SAYING THIS WEEK?

Forecast for the Week 

A slow week of economic reports comes at a time when news stories beyond the markets will be taking center stage:

  • The week starts off Monday morning with the ISM Services report, which measures the non-manufacturing sector. Leading up to this week’s report, the ISM Services Index has seen three consecutive monthly increases and came in at its highest level since March in the last report.
  • On Thursday, we’ll see the weekly Initial Jobless Claims report.
  • Friday ends the week with a preliminary read on Consumer Sentiment for November.

In addition to those reports, two news stories will take center stage. First, the nation will continue to focus on helping the East Coast clean up and recover from the devastation of Hurricane Sandy.

Second, the presidential election will undoubtedly overshadow much of the news early in the week. One issue that will be important to watch after the election is how long it takes elected officials to shift back to the impending fiscal cliff that the country is headed towards. Remember, the United States’ mounting debt was a huge topic over the last year or so. But, as the election neared, much of the debt talk was silenced, as politicians from both major parties decided to wait and see what the leadership will look like after the election. After all, any approach to the problem will be impacted by who controls Congress and which party is in the White House.

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. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving — and when they 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 were 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, Bonds and home loan rates rebounded after their initial reaction to the optimistic Jobs Report and they remain near their historic lows. I’ll be watching closely to see what happens this week.

Chart: Fannie Mae 3.0% Mortgage Bond (Friday Nov 02, 2012)
Japanese Candlestick Chart
The Mortgage Market Guide View… 

Pushups for Your Brain

Improving brain function is not just a fad for MENSA aspirants anymore, it’s big news and the scientific community involved means business. Here are four innovative ways to test your own brain function, and help improve your cognitive ability and workplace productivity. Be sure to check them out and share them with clients, colleagues, and friends.

Psychometrics measures cognitive performance in areas like reaction time, executive function, and verbal learning. First, you take a battery of tests to see your current cognitive performance; then you introduce and track a new behavior, called “interventions” to understand whether it helps or hurts your thinking. The intervention can include changes to work routine, diet, even what time you drink coffee or smoke a cigarette. www.quantified-mind.com/about

Brain Training involves playing simple games that build your memory, problem solving abilities, and other cognitive functions that are critical to professional work environments. www.lumosity.com

Neurofeedback tools require users to wear an EEG headband with small sensors that track brain waves. The devices are wireless and create real-time analytics with your PC or smartphone, measuring how deeply you focus on any given job task, helping you monitor and minimize distraction and stay in a productive state longer. www.axioinc.com/the-product.html

Nudgers are mobile apps or online tools that ping you with reminder questions such as, “When was the last time you drank a glass of water?” or “Did you take a walk today?” Behavioral researchers have long realized people often don’t do what they say they want to do. Nudgers can be one way to make sure you keep your New Year’s resolution, or any other new habit you’d like to build. www.beeminder.com

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 November 05 – November 09

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. November 05
10:00
ISM Services Index
Oct
NA
55.1
Moderate
Wed. November 07
03:00
Crude Inventories
Sep
NA
-2.045M
Low
Thu. November 08
08:30
Jobless Claims (Initial)
11/03
NA
363K
Low
Fri. November 09
09:00
Consumer Sentiment Index (UoM)
Nov
NA
82.6
Low
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