Last week in review (April 16 – 20, 2012)
Retail Sales in March rose by a nice 0.8%, as consumers bought all kinds of products. This adds to the increasing trend seen in January and February and is a good sign for our economy, as consumers don’t spend when they aren’t feeling optimistic about their financial situation.
In the manufacturing sector, both the Empire State Manufacturing Index and the Philly Fed Index came in below expectations. This is largely being attributed to a global slowdown, and experts say that the outlook for manufacturing remains positive but is not accelerating at the present time. In the housing sector, Existing Home Sales and Housing Starts also fell in March.
Initial Jobless Claims spiked sharply higher last week. The Labor Department reported 386,000 new claims, which was above the 375,000 that was expected and well over the 350,000 range seen in recent weeks.
The news out of Europe was the growing concern about Spain’s ability to pay down debt, meet new budget deficit targets, and avoid a bailout or debt restructuring. The Spanish situation has prompted the G-20 (Finance Ministers and Central Bankers of the 20 largest economies) to urge the European Central Bank to do more to contain their debt crisis as it threatens global growth. And let’s not forget that besides Spain, we still have France, Portugal, Ireland and Greece to deal with in future months and years.
So what does all of this mean for bonds and home loan rates? There will likely be more safe haven trading into the relative safety of the U.S. dollar and bonds (which will benefit mortgage bonds, to which home loan rates are tied) as the uncertainty in Europe continues. And more negative economic reports here in the United States could increase safe haven trading into bonds.
Housing Starts Chart
As you can see in the chart below and as mentioned above, Housing Starts fell 5.8% in March to 654,000 on an annualized basis.
In the news this week (April 23 – 27, 2012)
Below is the economic report calendar for this week