This past week all else was forsaken on the economic front for Friday’s tame read on inflation (year over year still below the Fed comfort level at 1.9%) and an almost assured Fed Rate cut on December 11, 2007. The question is whether the cut will be .25% or .5%. Mr. Bernanke stated that the housing slump and problems with the secondary mortgage market are “adding greater than usual uncertainty to the economic outlook”.
Money flooded back into the stock market on the indication of a Fed rate cut and mortgage-backed securities suffered which is great for mortgage interest rates. We do expect this dip in mortgage interest rates to be very short-lived, however.
This week initial jobless claims will report on Thursday and on Friday the unemployment rate and consumer sentiment index will report. These job reports could indicate whether the Fed rate cut will be .25% or .5% and consumer sentiment will also give the economy reason to celebrate during the holidays or prepare for continued uncertainty and volatility in the new year. Thank you for the opportunity to serve you and your clients and have a great week.
