Market Outlook for the week of February 28, 2011

QUOTE OF THE WEEK... "We would like to live as we once lived, but history will not permit it."--John F. Kennedy


INFO THAT HITS US WHERE WE LIVE...Things do keep changing, but we all hope that by and large those changes mean progress. We certainly saw evidence of that in the housing market last week, as Existing Home Sales headed up in January for the third month in a row. They've now reached a 5.36 million annual rate, close to the long-term trend of 5.5 million and up over 5% from a year ago. This, as Martha Stewart says, is "a good thing," since the supply of existing homes has now dropped to 7.6 months, close to the 6-month ideal, which favors neither buyers nor sellers.

The Case-Shiller home price index for the 20 largest metros was down in December, its sixth straight monthly decline since the tax credit ended. The media seemed thrilled to announce a "double dip" in housing prices, probably because they've been unable to use their "double dip" catch phrase for anything else. The facts, as usual, tell another story. Case-Shiller was down just 2.4% for the year, its smallest drop since the 2006 price peak. And some observers anticipate modest price gains this year. New Home Sales did fall 12.6% in January, which may have been due to the bad weather, though sales were up in the Northeast and Midwest and down in the West and South. Go figure. Inventories are now at their lowest level since 1967.

BUSINESS TIP OF THE WEEK...Targeting is a powerful business strategy. Don't try to be all things to all people. Pick a niche. The secret to broadening your appeal often lies in narrowing your focus.

>>> Review of Last Week

BULLS TAKE A BREATHER...Everyone on Wall Street had Presidents Day off Monday but the bulls never really showed up for work the rest of the week either. Well, bulls did stage a bit of a comeback on Friday, but it wasn't enough to bring stock prices up to where they were the week before. So after three weeks of charging higher, the markets fell off, as all three major indexes went south for the week.

The Middle East continues to trouble investors, with Libya the latest focal point for that region's violent uprisings. There was a sympathetic jump in oil prices, never a good development for our economy, and the week ended with the second estimate for Q4 GDP revised DOWN to a 2.8% growth rate from the original 3.2%. Weighing in against these negatives, the latest Consumer Confidence Report showed people's attitudes about the economy are actually growing more upbeat. The Richmond Fed index showed robust manufacturing growth in the important mid-Atlantic region. And initial jobless claims went below 400,000 for the week, while continuing claims remain under 4 million.
For the week, the Dow ended down 2.1%, at 12,130; the S&P 500 was down 1.7%, to 1,320; and the Nasdaq was off 1.9%, ending at 2,781 .

Bond prices benefited from both increased tensions in the Middle East and the drop in GDP. The flight to safety helped the FNMA 4.0% bond we watch end decidedly up for the week, closing at $98.17. Mortgage rates eased a tad lower again. Freddie Mac's weekly survey of conforming mortgages showed national average fixed-rate mortgage rates staying down near historic lows.

DID YOU KNOW?...Mortgage interest rates are based on Mortgage Backed Securities (MBS), also called mortgage bonds. When bond prices go up, mortgage rates go down, but when bonds drop, rates rise.

>>> This Week’s Forecast

STEADY AS SHE GOES...This week there's a wide range of economic news, but it's all expected to be a bit bland. Core PCE Prices, the Fed's favorite inflation measure, should drift up a little, but stay well within the target range. The ISM and Chicago PMI indexes are forecast to show manufacturing growing, though at no faster a rate. Pending Home Sales, a measure of signed contracts for closings a few months out, should be down a bit in December after being up a bit the previous month. Q4 Productivity is expected to hold steady.

The big news of course will be the February Employment Report come Friday. But again, steady progress is predicted, not the dramatic boost in jobs we need. With 180,000 new jobs forecast, the unemployment rate will actually inch up because of workforce expansion.

>>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of February 28 – March 4

>>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months...There are more rumblings about inflation, which could send the Fed Funds Rate heading north, but not while the jobs recovery is proceeding at such a snail's pace. For the first half of the year, economists think there is virtually zero likelihood of a rate hike from the Fed. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%:

Probability of change from current policy:

 
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© 2011 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking– lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender.

Get a jump on your taxes...

Here are some great tips on how to get organized for filing that return!

Nobody takes in more money than the Internal Revenue Service -- and they do it without giving us any pleasure for our efforts! We can't make doing your taxes fun, but we can give you some tips to take the pain out of tax preparation. The key is to do a little advanced planning and organization. And if you know what information you'll need, it will speed up the process of doing your return -- and getting your refund!

Organize your papers and files. It's a good idea to have a system for managing your finances. It doesn't matter if it's simple or sophisticated, just that it's an approach you'll actually use. Many people like a basic three-folder system they keep up with year-round.

* Folder 1–Income: Salary, dividends, earnings, distributions, checking account interest; and don't forget the 1099 Form you got when you redeemed that savings bond.

* Folder 2–Expenses and Deductions: Make files for major categories like contributions, medical, and business expenses; put in canceled checks, bills, statements and receipts, mortgage statements, investment-related expenses, medical bills, child-care costs, and non-reimbursed business expenses for things like gas, food, and lodging.

* Folder 3–Investments: This can include investment account statements, 1099 Forms, and K-1 Forms for certain trusts or partnerships; ask a CPA or Financial Advisor for advice, as you should with all tax questions..

There are also some easy-to-use software programs. Just go online, search "tax preparation programs" and check out what's available.

Don't procrastinate. Get started now! Putting off preparing your tax return until April 14 is never a good idea. There 's a greater possibility you'll make mistakes. And if you're working with a tax preparer, that person may not have time to complete your return by the deadline. Even if you file for an extension, you'll still have to pay what you owe by April 15 to avoid penalties and interest. And if you're due a refund, you'll have to wait.

Use a professional. If you're overwhelmed just organizing your papers, hire a professional to do your return. This is an especially good idea if your tax situation is the least bit complex, including lots of investments, the purchase or sale of a business, or a 1031 exchange of property that defers capital gains or losses. Ask a CPA or Financial Advisor for advice.

Get free help from the IRS. Go to www.irs.gov and download IRS Publication 17 (2010): Your Federal Income Tax, available in both English and Spanish. This is the authority for answers to lots of tax questions. There's also a toll-free IRS TeleTax service at 800-829-4477 with recorded messages on lots of topics. Any other questions can get answers at the IRS help line: 800-829-1040.

Search around the IRS website. You'll find a truly mammoth site at www.irs.gov. It offers forms, instructions, and publications to download; you can find information on tax law, plus answers to frequently asked tax questions. The best way to navigate your way through all this is to click on "Site Map", "Individuals", and then "1040 Central" for a more manageable range of options.

So get started now! And good luck!

Feel free to call or email us about any matters, particularly those relating to home financing or refinancing. We're glad to talk further.... Have a great day!

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© 2011 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking– lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender.

Market Outlook for the week of February 21, 2011

Quote of the week... "I've been blamed for just about everything that's wrong with this country."--Elvis Presley

INFO THAT HITS US WHERE WE LIVE... We who work in the real estate and mortgage industries know exactly how Elvis felt. The same people who unfairly blamed us totally for the recession now look to us alone for signs the economic recovery has taken hold. They might want to remember the health of the housing market is directly dependent on the health of the jobs market, which is not under our control. In any case, everyone felt better last week when January Housing Starts were UP a surprising 14.6%. Even though starts are down 2.6% from a year ago, this still shows builders are more hopeful going forward. The boost came from multi-family units, though single-family starts were off a mere 1% for the month.

A lot of home buying activity is due to the affordability now out there. The National Association of Home Builders (NAHB) and a major bank reported their index shows home affordability in Q4 of 2010 at its highest level in 20 years. Their measure found that 73.9% of the new and existing homes sold in Q4 were affordable to families making the national median income of $64,400.

Business tip of the week... A big part of success is not giving up. Studies show that one trait shared by all very successful people is perseverance. They are persistent, determined, tenacious, pursuing a goal far beyond the point where the average person gets discouraged.

>>> Review of Last Week

THE BULLS KEEP CHARGING... It's not like the running of the bulls at Pamplona just yet, but the bulls on Wall Street are definitely picking up steam. We had another weekly gain in the stock market as the three major indexes were up around 1% and the Dow and the S&P 500 hit new two-year highs. The Nasdaq reached a three-year high, just short of its 2007 peak. If the stock markets are a leading indicator of the overall economy, the recovery should pick up steam as the year goes on.

There were worries over rising Chinese interest rates and disruptions in the Middle East, but these were dispelled by the economic reports. The consumer is key to the recovery, so it was good to see retail sales are now UP seven months in a row. Inflation was a little hotter than expected, as year-over-year, the Core Consumer Price Index is now up 1.0%. Core CPI, the Fed's key inflation reading, is still within their target range and observers feel deflation concerns are now put to rest.

In other news, the Empire State Index showed manufacturing continuing to expand. This is great, though the jobs recovery depends on the services sector, where over 85% of the workforce is employed. Fortunately, that sector is expanding at its fastest pace in five years. Let's hope the jobs follow.

For the week, the Dow ended UP 1.0%, at 12,391; the S&P 500 was also UP 1.0%, to 1,329; and the Nasdaq went UP 0.9%, ending at 2,834.

Even with the stock surge, bond prices held on. Inflation was a little hotter than expected, but still tame. The FNMA 4.0% bond we watch ended up 18 basis points for the week, closing at $97.18. Mortgage rates, which had been inching up, fell back a bit. Freddie Mac's weekly survey of conforming mortgages showed national average fixed-rate mortgage rates remained near historic lows.

>>> This Week’s Forecast

JANUARY HOME SALES, CONSUMER MINDSET, Q4 GDP... Happy Presidents Day! The markets will be closed Monday but then we'll have some important economic reports. January Existing Homes Sales on Wednesday are expected to be a tad off December's pace. The same goes for January New Home Sales on Thursday.

The week begins and ends with readings on the consumer mindset. Tuesday's Consumer Confidence is forecast up for February while Friday's Michigan Consumer Sentiment should hold steady. January Durable Goods Orders are predicted to be growing again, a sign business is investing in capital equipment and, perhaps next, in jobs. Friday, we get the second estimate of Q4 GDP, expected to be up a bit from the original estimate.

>>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of February 21 – February 25

>>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months You hear a lot more experts now disagreeing with Fed policy, including some Fed members. But Fed Chairman Bernanke seems determined to keep the Funds Rate at its rock bottom level until we see stronger signs of economic growth and jobs recovery. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%:

Probability of change from current policy:

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© 2011 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking– lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender.

PrimeLending Welcomes Tom Harer to Team

FOR IMMEDIATE RELEASE
Contact: Chad Peterson
469-737-5714, cpeterson@primelending.com
Photography available upon request.

PrimeLending Welcomes Tom Harer to Team

BLOOMINGTON, MN (Feb. 16, 2011) – Dallas-based residential mortgage originator PrimeLending, a PlainsCapital Company, today announced the addition of Tom Harer as the production manager of their 3050 Metro Dr. location in Bloomington, MN.

Harer brings over ten years lending experience from previously being with Prospect Mortgage and Bell Mortgage. He found compelling reasons to join PrimeLending.

“I was amazed at the variety of products and freedom available at PrimeLending to market my services. From website optimization, to social media, to proprietary database management systems, I have the tools in place to take my business from good to great,” said Harer. “Compliance and marketing are my most important business development partners at PrimeLending.”

Branch manager Julie Claseman continues to recruit top talent to her branch in Bloomington, MN.

“Our business is growing in the Twin Cities market because PrimeLending's platform allows a professional like Tom to thrive as the mortgage industry undergoes dramatic changes,” said Claseman.



About PrimeLending

PrimeLending, a PlainsCapital Company, is a Dallas-based residential mortgage originator with more than 200 locations in 34 states and more than 1,900 employees. Offering fixed, adjustable rate, FHA, VA and JUMBO loans, permanent construction financing, refinancing and relocation programs, PrimeLending is licensed to originate and close loans in 50 states. Founded in 1986, PrimeLending was ranked as the top FHA lender in Texas and tenth in the nation for 2009. Find more information at PrimeLending.com.


Sources: FHA rankings obtained from MortgageDataWeb.com and are determined from data collected by the Department of Housing and Urban Development.


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PrimePoint, February 2011 - part one

At the 2011 PrimeLending Sales Rally, Dawn Robinson, our Senior Vice President of National Production, inspired us all. As the Super Bowl was held within days of our rally, this was timely. Here are a few segments:


How do you predict the winner?


Some would say the number of fans you have is one indication of who will win. The more people you have in the seats of the stadium or the more people you have watching from home is directly correlated to winning.


At PrimeLending, I’m proud to say that we have a good number of people cheering for us. Our Customer Satisfaction Surveys clearly reflect our clients are among our fans, with positive responses numbering well into the tens of thousands. In every category measured, our rankings start with a 93% approval rating and just go up from there.


In the same way, we know a few of the most important fans for you are the ones you have at home. What you do is so important, but we also know the reasons you do what you do are even more important. You can trust that our Core Conviction of a People Centric Culture includes your family. Knowing how important they are to you makes them important to us.


Some say winning is clinched by having the home field advantage. Playing on your own turf makes the difference. You’re familiar with your surroundings, you know the systems, you know the fans, the cheers. You’re comfortable when playing at home.


At PrimeLending, you all should feel like you are playing with the home field advantage. We have the ability to lend in all 50 states, so with our resources, no matter where in the country you are, you can help a family close on a home anywhere in the United States. You aren’t limited. Likewise, those that work with and for you at the Corporate office are just a phone call or email away. Yes, we may be in different cities, different area codes, and different time zones, but regardless of where your desk sits, your Corporate support is always nearby. No matter where your branch is located, we want you to feel comfortable, supported and safe. With PrimeLending, you are home.


Some would say the team that wins is the team that has the best staff. Each team you see playing football is made up of more than just who you see in uniform on the playing field. Assistant coaches, trainers, equipment managers, and so many others provide support to the team in every way. There’s a team you don’t see, behind the team you do see.


At PrimeLending, you have the best people behind you. Our departments know that you are our team on the field, and each person in those areas works hard every day so that you can play the game better. The stories of success from our different departments can never be told separately from stories of your success. We work to improve our systems, not to make our jobs easier but to make your job easier. As our Core Convictions state, we are One Team/One Purpose. You, the team on the field, are our driving force and our daily focus.


To be continued...
 
Please watch for Part Two of her inspiring talk as we continue to share how with PrimeLending, EVERYONE WINS!
 
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Dawn Robinson joined PrimeLending, a PlainsCapital Company in 1996 and serves as Senior Vice President of National Production. In this role, she oversees branch production for all of PrimeLending’s branches. Her desire to promote accountability while offering “hands on” leadership has helped the PrimeLending production team achieve its goals and receive the public recognition it deserves. Dawn also is active in several professional organizations, including the Dallas MBA, Texas MBA and the MBA. Recently, she earned the distinction of receiving the James M. Wooten Scholarship for participation in the MBA’s Future Mortgage Leaders program. Additionally, Dawn was recently selected to be part of the Master’s Coach Program, an exclusive program designed to bring together elite mortgage professionals and provide one-on-one coaching and collaboration to grow their businesses. Dawn’s goal is to continue contributing to the success of PrimeLending as it pursues and maintains a dominant presence in the mortgage industry.

Market Outlook for the week of February 7, 2011

INFO THAT HITS US WHERE WE LIVE... There's good news in the latest housing market forecast for 2011 from the National Association of Realtors (NAR). After dipping 4.8% last year, sales of existing homes are predicted to grow 7.9% this year, to 5.3 million. The gain for 2012 is forecast to be a little less, up 4.5%, to 5.53 million. The existing home median price went up 0.3% in 2010, a nice recovery from the 12.9% price drop of 2009. For 2011, the NAR sees it rising 0.5%, to $173,000, then another 2.4%, to $177,900, in 2012.


New home sales are forecast to come back more briskly, up 17.7% in 2011, following their 15.5% drop in 2010. The 2012 projection is for a strong 51.1% sales gain, to 565,000 homes. The median price for new homes, which gained 2.2% last year, should go up another 1.8% in 2011, to $224,700, then 1.9% in 2012, to $229,000. The NAR's chief economist says this rebound in home sales does depend on an improvement in the jobs market. Affordability also matters and in Q4 of 2010 housing was the most affordable on record, according to NAR numbers going back to 1971. The NAR feels the current situation of low home prices along with low interest rates should continue.


>>> Review of Last Week


HELLO, 12,000!... Last week saw strong corporate earnings, more indications the economy is healing, and Ben Bernanke telling the National Press Club the Fed won't be withdrawing its policy support anytime soon. The net result? The Dow shot up five days in a row, crossing the 12,000 threshold and staying there, trading near its highest levels since the middle of 2008. All three major indexes delivered impressive gains, with the S&P 500 enjoying its best January since 1997. Investors shrugged off worries the Egyptian protests might further de-stabilize the whole Mideast.


Corporate earnings are running way ahead of expectations and, even more encouraging, future earnings estimates are up. The week's star performers included mammoth Exxon Mobil, drug biggie Pfizer, and video gamer Electronic Arts. The vast majority of companies reporting beat their Q4 earnings expectations, as retailers chimed in with better than expected monthly same store sales results for January.


Investors also liked the economic data. Q4 productivity was up 2.6%, proving that, yes, we ARE working harder. But we're also being compensated for that extra effort, as personal income rose in December along with personal spending, which helps fire up the economy. But things aren't overheating yet, since Core PCE Prices, the inflation number the Fed watches, was up just 0.7% the past year. ISM Manufacturing and Services indexes both showed strong economic growth. The January Employment Report showed a gain of just 36,000 jobs, but this was put to the unusually bad weather preventing people from working -- several hundred thousand more than usual. Private sector payrolls were up 50,000, their 11th monthly gain in a row, which helped drop the unemployment rate to 9.0%.


For the week, the Dow ended UP 2.3%, at 12,092; the S&P 500 was UP 2.7%, to 1,311; and the Nasdaq shot UP 3.1%, ending at 2,769.


While stocks soared higher, bonds got hammered. Even the Egyptian unrest couldn't ignite a flight to safety, as investors wanting to catch the rising wave of stock prices took their money out of bonds. The FNMA 4.0% bond we watch ended down 187 basis points for the week, closing at $97.22. In spite of this drop, news of an improving economy and low inflation kept mortgage rates at historically low levels. Freddie Mac's weekly survey of conforming mortgages reported average fixed-rate mortgage rates pretty much unchanged.


>>>  This Week’s Forecast


A QUIET WEEK... We'll have the usual weekly and continuing jobless claims, and no one is expecting huge drops in these numbers just yet. Optimistic observers expect serious declines in claims in another month or so. We'll also see the December Trade Balance showing imports growing versus exports, although U.S. companies' export revenues are still strong, a good thing. Finally, consumer confidence in the economy is forecast to be growing, at least the way the February Michigan Consumer Sentiment Index sees it on Friday.


>>>  The Week’s Economic Indicator Calendar


Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.


Economic Calendar for the Week of February 7 – February 11:

>>>  Federal Reserve Watch


Forecasting Federal Reserve policy changes in coming months Fed Chairman Bernanke spoke before the National Press Club last week and certainly left the impression that the Funds Rate will stay at its rock bottom level for a decent while longer. This week's economic reports shouldn't inspire the Fed to hike the Rate any time soon. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.


Current Fed Funds Rate: 0%–0.25%:

Probability of change from current policy:

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© 2011 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; IL Dept. of Financial and Professional Regulation- lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking– lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender.