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Natallia Kolbun

Market Commentaries

Monday, January 14, 2013 - Article by: Natallia Kolbun - Lyons Mortgage Services Inc. - Message

Here is a recap of the the major economic and political data / reports from the prior week (a higher 10 Year Treasury Yield means generally higher mortgage rates in general and vice versa).

Monday (01/07/13): The 10 Year Treasury Yield dropped to 1.90%.

- There are No Major U.S. Economic Releases today.

- In Europe. ECB (European Central Bank) President Draghi will meet with his governing counsel to figure out interest rate and bond buying policy for the Euro region for the 2013 calendar year and also to figure out the rescue package for the bailout of Cyprus.

Tuesday (01/08/13): The 10 Year Treasury Yield dropped to1.87%.

- The November 2012 Consumer Credit Report (levels of consumer debts) came in at $16.0 Billion ($14.1 Billion the previous month) coming in greater than market expectaions ($10.6 Billion). This increase in consumer credit, due mostly to borrowing for student loans and automobiles, is a positive sign for U.S. consumer spending and economic growth.

- In Europe, December 2012 Eurozone Unemployment reached a record high of 11.8%, with greater than 26 Million individuals unemployed. On the other side, December 2012 European Consumer and Business Sentiment rose greater than market expectations. These economic releases show that while European consumer and business spending could increase in the near future, the Eurozone economy will still be facing the challenge of correcting record high unemployment.

Wednesday (01/09/13): The 10 Year Treasury Yield dropped to 1.85%.

- There are no Major U.S. Economic Releases today.

- In China, December 2012 export growth rose to a seven month high with a 14.1% increase, coming in much higher than market expectations (4.0% increase). This report shows that China's economy, the world's second largest, is starting to pick up growth again.

Thursday (01/10/13): The 10 Year Treasury Yield rose to 1.89%.

- U.S. Weekly Jobless Claims increased to a 371K reading this week (367K the prior week), coming in worse than market expectations (364K). This increase in jobless claims shows an increase in Americans filing for unemployment insurance, which is a negative sign for the U.S. Labor market and also shows that the U.S. employment is still only slowly recovering.

- November 2012 U.S. Wholesale Inventories rose by 0.6% (0.3% increase the previous month), coming in greater than market expectations (0.2% increase). This increase in wholesale inventories shows that wholesalers are keeping higher inventory levels than expected by having incrased confidence that they will be able to sell all of their products (good sign for U.S. economic growth).

- In Europe, the ECB (European Central Bank) left its benchmark interest rate the same at 0.75%, even though the Eurozone economy remains in a recession. This shows that ECB President Draghi has faith in that the Eurozone economy will eventually improve without needing further interest rate cut monetary stimulus.

Friday (01/11/13): The 10 Year Treasury Yield dropped to 1.88%.

- The November 2012 U.S. Trade Deficit rose to -$48.7 Billion (-$42.1 Billion the prior month), coming in greater than market expectations (-$41.8 Billion). This increase in the U.S. Trade Deficit is mostly due a pickup by U.S. Retailers in imported goods and an an increase in automobile imports. In general, while a decrease in a country's net exports (in relation to next imports) leads to a decrease in GDP (Gross Domestic Product), this increase in net imports was positive because it shows a pickup in U.S. consumer spending.

- In Japan, the Japanese government approved $116 Billion in Emergency Economic Stimulus to help improve the Japanese economy. Therefore, the Japanese government is using fiscal stimulus (spending additional money) by increasing aid to public works companes, businesses that invest in new technologies, and to small businesses. Japan is hoping that this increase in government spending will also lead to increased consumer and corporate spending, which would further expand Japanese economic growth.

** Today, Monday, (01/14/13): The 10 Year Treasury Yield dropped this morning 1.84%, meaning lower mortgage rates than Friday:

- There are No Major U.S. Economic Releases today.

- In China, Chairman Shuqing, the head of the China Securities Regualtory Commission, might increase the maximum allowable quotas that foreign institutional organizations are allowed to invest in the Chinese stock markets. This would encourage international capital to enter more easily into China, which would increase free trade and help increase Chinese economic growth.

U.S. Market Data/Releases for the rest of this week (big week of releases):

Tuesday (01/15/13): Retail Sales, PPI - Wholesale Inflation, Empire Manufacturing Report, Business Inventories

Wednesday (01/16/13): CPI - Consumer Inflation, Industrial Production, NAHB Housing Market Index, Fed Beige Book

Thursday (01/17/13): Weekly Jobless Claims, Housing Starts / Building Permits, Philadelphia Fed Manufacturing Survey

Friday (01/18/13): Michigan Consumer Confidence Sentiment

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