Mortgage Credit News - April 22, 1988

April 22, 1988

As this is written Friday morning, the bond and mortgage markets are rallying fairly well. Interest rates are unchanged for the most part since last week, today's improvement having recaptured losses early in the week.\n\nToday's decline in rates is due to the report this morning that March Durable Goods Orders were unchanged from the prior month, and the markets had been looking for a substantial increase. There is a pattern emerging in the recent economic data: measures of the price level show a relatively sharp increase in inflation, but the economy doesn't seem to be particularly strong. Last week's .6% increase in wholesale prices was reinforced by this week's report that the Consumer Price Index increased .5%; both are the largest increases in nearly a year. \n\nEvidence of weak underlying economic activity were Housing Starts released this week up 1.9% over February, and Building Permits rose 2.1%. These modest increases are even more modest when compared to levels a year ago which were 1015% highð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð the second decline in a row.\n\nThe pattern in the data reminds me of the stagflation era in the early 1970's, which was, not coincidentally, the era of the first big postwar decline in the dollar on foreign exchange markets. The current decline in the dollar, though necessary, will likely cause inflationary pre52/,)&# i€€€ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿeat, ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð ð ð 0ð is less than 2.5%, interest rates may come down a bit. If the estimate of GNP is much over 3%, life may be rough for a while. This is still not a good market in which to float points or rate.\n\nPlease remember that Project Home is next Wednesday, April 27. Betsy Kamin is in charge, and has just moved to Moore & Co. (4447800); she's a little overloaded, but there is still room for more shovel pushers. The turnout looks good this year, at least a little because Jerry Curry is organizing the party afterwards.