Trade Deficit Shrinks
Following recent week's packed schedule, there was
far less major
economic news last week. The global economic data
that was released was
generally a little stronger than expected. This
was negative for mortgage
rates, which ended last week a little higher.
The biggest surprise
in last week's economic news came from Friday's
data on imports and
exports. The December Trade Deficit declined to
the lowest level since
January 2010. Exports were higher than expected,
and imports were smaller
than expected. Since the first reading for fourth
quarter GDP used an
estimate of the December trade data, the actual
results will almost
certainly lead to an upward revision. The
release of fourth
quarter GDP showed the first decline since
December 2009, but economists
now predict that it will be revised to show an
increase of 0.5%. Stronger
growth is great news for the economy, but it
raises inflationary pressures
and is unfavorable for mortgage rates.
The housing market data
released last week also contained good news for
the economy. According to
the National Association of Home Builders (NAHB),
the number of improving
housing markets expanded for the sixth straight
month in February. The
index considers the levels of housing permits,
employment and home prices
to determine improvement. The latest report shows
that 259 of 361 metro
regions are improving (roughly 70%), up from just
12 regions in September
2011.
Also Notable
- The Fed's Evans predicted that
Unemployment will not decline to 6.5%
until mid-2015
- The European Central Bank (ECB) made
no change in rates
- German PMI economic growth data rose
to the highest level in 10 months
- The Treasury will auction $66
billion in 3-yr, 10-yr, and 30-yr
securities next week
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This Week
The most significant
economic report this week will be Retail Sales
on
Wednesday. Retail Sales account for about 70% of
economic activity. Import
Prices will also be released on Wednesday.
Industrial Production and
Consumer Sentiment will come out on Friday.
There will be Treasury
auctions on Tuesday, Wednesday, and Thursday.
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