This past week, we watched home loan rates tick modestly higher and retreat from three-year lows.

Why? There are three main reasons:

  1. U.S and Iran. On Wednesday, the de-escalation of tensions between the U.S. and Iran brought an immediate sense of calm to the financial markets. As a result, stocks traded to all-time highs at the expense of bonds and home loan rates.
  2. Jobs, jobs, jobs. Both the ADP and Jobs Report showed continued health in the labor market. The positive data is good news for the economy and good news for housing. Bonds hate good news, so rates ticked up.
  3. Improvement in Europe. Germany reported surprisingly stronger economic data, suggesting their economy is on the mend. In response to the good news, German rates ticked higher this week while putting upward pressure on our rates.

Bottom line: home loan rates are within a whisker of the best in three years and near the lowest in the history of our country. Coupled with a strong consumer and housing backdrop, this makes it an incredible time to either purchase or refinance a home.

Forecast for the Week
After the past week’s primary focus on the Middle East tensions that quickly faded, the markets in the upcoming week will try to get back to the basics of what’s been fueling the expansion in the U.S. economy — positive economic data, a strong job market, along with solid consumer confidence and spending.

The markets will receive data from the housing sector, consumer spending, manufacturing, and inflation from the consumer and wholesale level.

The phase one trade deal between the U.S. and China is expected to be signed on Wednesday.

Reports to watch:

  • Inflation data will be reported from the Consumer Price Index on Tuesday followed by the Producer Price Index on Wednesday.
  • From the manufacturing sector, the Empire State Index will be delivered on Wednesday with the Philadelphia Fed Index on Thursday.
  • The NAHB Housing Market Index is scheduled for Thursday with Housing Starts and Building Permits on Friday. Consumer Sentiment will also be reported on Friday.

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