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Central Banks See Continued Support
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Mortgage rates improved again this week and are now near their
best levels of the year. Again the
improvement resulted from statements by central bankers. The economic data had little effect.
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Statements by the heads of the International Monetary Fund
(IMF), the European Central Bank (ECB), and the U.S. Fed shared the same
sentiment, the global economy needs support.
IMF Managing Director Lagarde described economic growth in Europe as
"too slow, too fragile". ECB President
Draghi said the ECB will do what ever it takes to stimulate growth and raise
inflation. Inflation in the eurozone is
now -0.1%. The target is 2.0%. The minutes from the U.S. Fed meeting on
March 16th supported recent comments that the Fed will take a
gradual approach to raising the federal funds rate. These dovish comments were well received by
the bond markets, including U.S. mortgage-backed securities.
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The economic data released this week shows that the U.S.
economy is on far better footing than the overall global economy. The JOLTS report, which measures job openings
and labor turnover rates, showed that job openings rose and voluntary quits
increased. Both are signs of an improving labor market.
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The ISM Services index measures expansion or contraction in
the services sector of the economy.
Readings above 50 indicate expansion.
The index for March, at 54.5, shows that the service sector expanded again and did so at a better pace than the previous two months.
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Looking ahead, the Retail Sales report will be released on
Wednesday. Consumer spending accounts for about 70% of economic output in the
U.S., and the retail sales data is a key indicator. The consumer price index
(CPI) will come out on Thursday. CPI is a widely followed monthly inflation
report that looks at the price change for goods and services which are sold to
consumers. Industrial production, another important indicator of economic
activity, will be released on Friday.
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All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.
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All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.
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