by Calculated Risk on 7/10/2015 12:34:00 PM

From Fed Chair Janet Yellen: Recent Developments and the Outlook for the Economy Excerpt:

My own outlook for the economy and inflation is broadly consistent with the central tendency of the projections submitted by FOMC participants at the time of our June meeting. Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy. But I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step. We will be watching carefully to see if there is continued improvement in labor market conditions, and we will need to be reasonably confident that inflation will move back to 2 percent in the next few years.

Let me also stress that this initial increase in the federal funds rate, whenever it occurs, will by itself have only a very small effect on the overall level of monetary accommodation provided by the Federal Reserve. Because there are some factors, which I mentioned earlier, that continue to restrain the economic expansion, I currently anticipate that the appropriate pace of normalization will be gradual, and that monetary policy will need to be highly supportive of economic activity for quite some time. The projections of most of my FOMC colleagues indicate that they have similar expectations for the likely path of the federal funds rate. But, again, both the course of the economy and inflation are uncertain. If progress toward our employment and inflation goals is more rapid than expected, it may be appropriate to remove monetary policy accommodation more quickly. However, if progress toward our goals is slower than anticipated, then the Committee may move more slowly in normalizing policy.
emphasis added

by Calculated Risk on 7/10/2015 11:31:00 AM

In addition to Case-Shiller, and CoreLogic, I'm also watching the FNC, Zillow and several other house price indexes.

FNC released their May 2015 index data today.  FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 1.2% from April to May (Composite 100 index, not seasonally adjusted). 

The 10 city MSA increased 1.2% in May, the 20-MSA RPI increased 1.3%, and the 30-MSA RPI increased 1.2%. These indexes are not seasonally adjusted (NSA), and are for non-distressed home sales (excluding foreclosure auction sales, REO sales, and short sales).

Notes: In addition to the composite indexes, FNC presents price indexes for 30 MSAs. FNC also provides seasonally adjusted data.

The year-over-year (YoY) change was lower in May than in April, with the 100-MSA composite up 5.4% compared to May 2014.

The index is still down 16.2% from the peak in 2006 (not inflation adjusted).

Click on graph for larger image.

This graph shows the year-over-year change based on the FNC index (four composites) through May 2015. The FNC indexes are hedonic price indexes using a blend of sold homes and real-time appraisals.

Most of the other indexes are also showing the year-over-year change mostly steady at around 5% for the last several months.

Note: The May Case-Shiller index will be released on Tuesday, July 28th.

by Calculated Risk on 7/10/2015 08:41:00 AM

From A Evans-Pritchard: "Just spoke to senior Greek banker. Delighted. Sees 90% chance of deal. France + US saved hour. Still worried Schauble might throw spanner"

From the WSJ: Creditors Assess Greece’s Bailout Plan as Optimism Rises

Greece’s creditor institutions will make an assessment on the country’s eligibility for new bailout on Friday, as some leaders from the currency bloc voiced optimism about the latest Greek economic proposals.

However, a fight still looms about the level of debt relief that will have to accompany any new rescue deal for Greece.

Debt relief - and some hope for the future - are key elements to a successful plan.

From the NY Times: Is Greece Worse Off Than the U.S. During the Great Depression?  Great graphs.  Short answer: Yes.

by Calculated Risk on 7/09/2015 05:52:00 PM

Headlines on Greece - and a voice of reason:

Headline only from the WSJ: New Greek economic-reform proposals appear to be closer to creditor demands

From the Financial Times: Tsipras submits new plan to bailout monitors

From the WSJ: Greece Submits Reform Proposals as Pressure Mounts to Reach Rescue Deal

“The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors,” [said Donald Tusk, the European Council president]

No word from Wolfgang Schäuble yet, but I expect "Nein, nein, nein".

Friday:
• At 12:30 PM ET, Speech by Fed Chair Janet Yellen, U.S. Economic Outlook, at The City Club of Cleveland's Sally Gries Forum Honoring Women of Achievement, Cleveland, Ohio

by Calculated Risk on 7/09/2015 01:59:00 PM

From Freddie Mac today: Global Uncertainty Pushes U.S. Mortgage Rates Lower

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing an investor flight to safety for U.S. Treasuries is pushing average fixed mortgage rates lower and helping to keep buyer activity strong toward the close of the spring homebuying season. ...

30-year fixed-rate mortgage (FRM) averaged 4.04 percent with an average 0.6 point for the week ending July 9, 2015, down from last week when it averaged 4.08 percent. A year ago at this time, the 30-year FRM averaged 4.15 percent.

15-year FRM this week averaged 3.20 percent with an average 0.5 point, down from last week when it averaged 3.24 percent. A year ago at this time, the 15-year FRM averaged 3.24 percent.

Click on graph for larger image.

This graph shows the 30 year and 15 year fixed rate mortgage interest rates from the Freddie Mac Primary Mortgage Market Survey®.  

30 year mortgage rates are up from the all time low of 3.35% in late 2012, but down from 4.15% a year ago. 

The Freddie Mac survey started in 1971. Mortgage rates were below 5% back in the 1950s.