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Week Marked by Volatility
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It was a volatile week in the financial markets and wild swings in
stock prices caused equally wild swings in MBS prices and mortgage rates. The net result was favorable for mortgage
rates, which ended the week marginally lower once again, and they now stand at
their lowest level since June 2013.
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Concern about economic
weakness in Europe, China, and other markets around the world has been the
primary driver of the recent volatility. Investors fear that the weakness overseas will ultimately slow economic
growth in the US.
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The Retail Sales
report released this week may have been an indication that the concern is
justified. After several months of
steady improvement, Retail Sales in September declined. With investors expecting an increase of .3%,
Retail Sales ex-auto actually fell .2% from August.
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Adding to the concerns and uncertainty about the pace of economic
activity is the Ebola scare. Even though the number of reported cases in
the US is miniscule, the impact on the economy could be significant if the fear
of contracting the virus alters the travel and buying habits of the general
public. It has already affected airline stocks, which saw their prices
plunge this week.
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Market volatility will likely continue, in the near term at least, as
investors deal with these same issues. The economic calendar is light next
week. Existing Home Sales will be released on Tuesday. The Consumer Price
Index (CPI), the most closely watched monthly inflation report, will come out
on Wednesday. CPI looks at the price change for finished goods that are sold to
consumers. New Home Sales 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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