MMG WEEKLY – WHAT ARE THEY SAYING THIS WEEK?

MMG Weekly / Vantage Production.blueForecast for the Week

The labor market will be front and center this week, with May’s Jobs Report headlining several important releases.

  • The closely-watched ISM Index will be released on Monday, bringing key news for the manufacturing sector. Look for the ISM Services Index on Wednesday.
  • Wednesday also brings Productivity for the first quarter of 2014, and private payroll numbers from the ADP Employment Report.
  • Weekly Initial Jobless Claims will be delivered on Thursday.
  • That leads us to Friday, when one of the most closely-watched economic reports will be released—the Jobs Report for May, which features Non-farm Payrolls and the Unemployment Rate.

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 on which home loan rates are based.

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, Mortgage Bonds hit 2014 highs, though news on inflation helped cap some of these gains. Home loan rates are at some of the best levels we’ve seen in months, and I’ll be watching them closely in the weeks ahead.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday May 30, 2014)

Japanese Candlestick Chart

The Mortgage Market Guide View…

Budget Stretching Business Behaviors

In today’s economic environment, many small-business owners and independent professionals are paying better attention to their budgets. Here are some easy tips that can help.

First, take inventory. One of the best ways to reign in your budget is to analyze spending habits. For a true picture of spending, keep a log of every expense (for small businesses, ask your accountant for a report, or track with software like QuickBooks).

Second, analyze items. Look for things like unusual office supply expenses, ineffective marketing, unnecessary printing, random entertainment expenses and similar items that could be deemed non-essential.

Third, organize by need. Group your expenses according to Must Haves (rent, insurance, approved supplies and utilities), May Haves (updated furniture, new business attire, training, technology upgrades, flights and hotels), and Non-essentials (items that, while nice, could easily be cut or minimized). This will give you a good top down view so you can cut expenses in the way that makes the most sense for your business.

As always, please feel free to share these tips with your clients and colleagues!

Economic Calendar for the Week of June 2 – June 6

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. June 02
10:00
ISM Index
May
NA
54.9
HIGH
Wed. June 04
08:15
ADP National Employment Report
May
NA
220K
HIGH
Wed. June 04
08:30
Productivity
Q1
NA
-1.7%
Moderate
Wed. June 04
10:00
ISM Services Index
May
NA
55.2
Moderate
Wed. June 04
02:00
Beige Book
Jun
NA
NA
Moderate
Thu. June 05
08:30
Jobless Claims (Initial)
5/31
NA
327K
Moderate
Fri. June 06
08:30
Non-farm Payrolls
May
NA
288K
HIGH
Fri. June 06
08:30
Unemployment Rate
May
6.4%
6.3%
HIGH
Fri. June 06
08:30
Average Work Week
May
34.5
34.5
HIGH
Fri. June 06
08:30
Hourly Earnings
May
NA
0.0%
HIGH

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