Review of the next FOMC Janet Yellin.

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An Overview on our Next (?) FOMC Chairwoman
The Week Ahead -> The “Keys”
Tim McLaughlin
- Heavy Dose of Housing Data during a short holiday week
As the confirmation of Janet Yellen as the next FOMC
Chairperson becomes more of a certainty, the market is
beginning to envision what a “Yellen” Fed will look like. What
they see is someone who believes wholeheartedly with the
current Fed approach to tackling stubbornly low inflation, a
jobs market which is gaining traction but still far from where it
needs to be with respect to quality job growth, and a housing
market that is slowing down from the torrid pace of the past
year and a half. This should be good news for mortgage
participants in the short run.
Why all the Monday Morning Quarterbacking on Mrs.
Yellen in the market place?
Because once Ben Bernanke leaves office Janet Yellen
will most likely become a mortgage participants new
BFF…and if there’s one thing the mortgage market needs
right now is a powerful BFF. So for now the market breathes
a slight sigh of relief knowing that Mrs. Yellen is not about to
pull the punch bowl from the party until the data confirms, in
her mind, that the economy can weather an exit from QE.
Hopefully, you’re now a little bit more knowledgeable should,
on the off chance, one of your borrowers ask what a new
Fed Chairperson means for interest rates.
Last
2.0%
-5.6%
Pending Home Sales (YoY)
-
1.1%
11/25
Dallas Fed Manufacturing
-
3.6%
11/26
Housing Starts
921K
-
Housing Starts (MoM)
3.6%
-
11/26
Building Permits
933K
-
11/26
Building Permits (MoM)
0.9%
-
11/26
S&P/CS 20 City (MoM)
0.90%
0.93%
11/26
S&P/CS 20 City (YoY)
12.97%
12.82%
11/26
S&P/CS HPI
-
164.53
11/26
S&P/CS HPI (YoY)
-
10.08%
11/26
Housing Price Index (MoM)
0.4%
0.3%
11/26
House Price Purchase Index
-
2.10%
11/26
Consumer Confidence
72.1
71.2
11/27
MBA Mortgage Applications
-
-2.3%
11/27
Initial Jobless Claims
330K
323K
11/27
Continuing Claims
-
2876K
11/27
Durable Goods Orders
-1.7%
3.8%
11/27
Yellen is not always a dove though and has a history of
attacking inflation as aggressively as anyone else, having
voted for interest rate hikes over a dozen times in the
past. So don’t think we’re getting an inflation pushover. What
we are getting is a well-tenured academic who understands
the nuisances of economic theory and who Alan Greenspan
and Ben Bernanke openly admit using as a resource when
they’re stuck on a particularly vexing and troublesome
problem. Hopefully we’re getting someone that can continue
to guide us through the final stages of the worst economic
downturn since the 1930’s.
Prediction
11/26
What makes Yellen qualified for this position? While
Larry Summers was President Obama’s clear first choice
many would argue that Brooklyn born Mrs. Yellen should
have been. Yellen graduated from Brown, received her Ph.D.
at Yale, taught at Harvard, served as Chair of the Council of
Economic Advisors for President Bill Clinton, ran the Federal
Reserve Bank of San Francisco, and currently serves as
Vice Chairperson of the FOMC under Ben Bernanke. So,
yeah, she’s got some skills.
Date
Economic Release
11/25
Pending Homes Sales (MoM)
11/25
ex Transportation
0.5%
-0.2%
61.0
65.9
11/27
Chicago Purchasing Mgrs
11/27
Cap Goods Orders
-
-1.3%
11/27
BB Consumer Comfort
-
-34.6
11/27
U of Michigan Confidence
73.0
72.0
11/27
Leading Index
0.0%
0.7%
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