Forecast for the Week

The second half of the week heats up with key news on inflation, manufacturing and retail sales.

• The first economic report doesn’t get released until Wednesday with Retail Sales, and the numbers will show how retailers did in December, the big shopping season.
• On the inflation front, look for the wholesale-measuring Producer Price Index on Thursday, followed by the Consumer Price Index on Friday.
• Thursday brings two key manufacturing reports: the Empire State Index and the Philadelphia Fed Index.
• Also on Thursday, Weekly Initial Jobless Claims will be released, as usual.
• The Consumer Sentiment Index ends the week on Friday.

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 have been trending higher. Home loan rates remain near record lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday January 9, 2015)

The Mortgage Market Guide View…

Time to Think About Taxes

Tax time is here. Do you have your 2014 documents in order? Use this overview to get started. As always, consult with your tax professional for the best advice for your individual circumstances.

Look Back to Plan Ahead
Review your 2013 return to remind you of the detailed information you gathered in prior years regarding itemized deductions, business use of home or car, and equipment depreciation.

Pull Together Documentation
Receipts, invoices, canceled checks, online bill pay or automatic deduction logs, mileage logs, and other documents substantiate deductions. If applicable to you, gather your documentation for:

• Charitable gifts
• Equipment purchases
• Memberships to professional and trade organizations
• Mileage for business
• Mileage for volunteering
• Office supplies
• Phone and data bills
• Subscriptions to professional and trade publications
• Utility bills (for business use of home)

Plan for 2015
If this year’s gathering process does not go as smoothly as you’d like, devise a meaningful and easy-to-follow record system to start 2015 on the right foot. Having one place to keep your records will make it easier next year—as long as you dutifully put invoices, receipts and other documentation there. A file folder or box works fine if it is easily accessible. Electronic scanning and storage also works but may take more time.

If you deduct mileage expenses, keep a small notebook and pen in your glove compartment or center console. Commit to keeping track of every business-related mile traveled, along with the date and purpose of travel. You can also use the notes section of your smart phone to keep track of this information. Tally your mileage at the end of each month rather than waiting until the end of the year. This will assist you in substantiating expense and deduction claims going forward.

On a final note, store all tax-related records in a secure location for at least five years in case the IRS asks for further information.

Feel free to share this friendly reminder about tax time with your colleagues, friends and business associates.

Source: irs.gov

Economic Calendar for the Week of January 12 – January 16

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