Destin Real Estate News Blog

Increased optimism that a Greek bailout package will be approved on Monday caused investors to shift to riskier assets, which was negative for mortgage rates. Mixed US growth and inflation data had little net impact. Mortgage rates ended the week a little higher.

After several weeks of uncertainty, it appears that European officials are close to reaching agreement on a much needed bailout package for Greece. Despite strong public opposition, Greek leaders took a big step by passing a budget with new austerity measures. Comments from euro zone leaders expressed broad support for providing additional aid, which Greece needs to avoid a default on debt maturing on March 20. Prior to this week, it appeared that the option to let Greece default and possibly leave the European Union was under serious consideration, but investors now believe that European leaders will not let this happen. An important meeting is scheduled for Monday, and investors expect a deal to be announced. In anticipation, investors shifted to riskier assets, and relatively safer assets such as mortgage-backed securities (MBS) dropped in price, pushing mortgage rates higher.

The inflation data released this week showed that core inflation rates (which exclude food and energy) have continued to rise. Core CPI inflation was 2.3% higher than one year ago, which was the highest annual rate since September 2008. Fed officials forecast that core inflation levels will moderate later in the year. If it unexpectedly continues to move higher, however, the impact could be large. Higher inflation is negative for mortgage rates. In addition, it would be more difficult for the Fed to maintain its current loose monetary policy. Investors will be closely watching core inflation levels in coming months to see if the Fed’s forecast proves correct.

Monday’s meeting between Greek and euro zone officials will be the most highly anticipated economic event next week. Investors expect that a deal will be reached to provide additional aid to Greece. It will be a light week for US economic data. Existing Home Sales will be released on Wednesday. New Home Sales and Consumer Sentiment will come out on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. Mortgage markets will be closed on Monday in observance of Presidents Day.

For help with any real estate needs in the greater Destin area (from Pensacola Beach to Panama City Beach) email jeffduncanera@gmail.com or call 850-501-1123. Use the property search link below to search all properties currently for sale on the local REALTOR MLS anytime – NO REGISTRATION REQUIRED – Feel free to share with friends!…Realtor MLS – Property Search

With little US economic news this week, investors focused most of their attention on Europe, where Greece is attempting to avoid a debt default. A lack of progress in Greece late in the week caused a minor flight to safety, and mortgage rates ended slightly lower than last week.

For most of the week, it appeared that Greek officials were on track to deliver a package of austerity measures required for Greece to receive additional aid. The negotiations took an unexpected step backward on Friday, however, as Greek political leaders agreed on an austerity package on Thursday, but European Union (EU) officials stated that Greece will not receive additional aid until the Greek Parliament passes the package. Given the resistance among the Greek people, this is not a sure thing, and it extends the uncertainty about whether Greece will be able to avoid a debt default. As a result, investors shifted to relatively safer assets, including US mortgage-backed securities (MBS), which helped mortgage rates and hurt stocks.

In a light week for US economic data, the Jobless Claims report stood out. Weekly Jobless Claims unexpectedly dropped to 358K. Following several years of readings consistently above 400K, weekly claims have been mostly under 400K over the last couple of months. In the past, readings in this range have been consistent with an improving labor market. In January, the Unemployment Rate dropped to the lowest level since February 2009, and the recent Jobless Claims reports provide additional evidence that the labor market is moving in the right direction.

Also Notable:

• The four-week average of Jobless Claims fell to the lowest level since April 2008
• The US Trade Deficit increased to a six-month high
• The Dow stock index climbed to multi-year highs
• The European Central Bank (ECB) made no change in rates

The most significant economic data next week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales will be released on Tuesday. Retail Sales account for about 70% of economic activity. Industrial Production, another important indicator of economic growth, will come out on Wednesday, along with the detailed FOMC Minutes from the January 25 Fed meeting. Housing Starts will be released on Thursday. Import Prices, Philly Fed and Empire State will round out the schedule.