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US Mortgage Applications Improve

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US Mortgage Applications Improve

The US Mortgage Bankers Association has published this week’s Mortgage Application figures. At -1.2% this represents a minor improvement on last week’s -3.5%. The negative reading of this volatile inter week figure is within tolerance and therefore should not be a cause for too much concern over US growth prospects.

US markets are generally sustaining gains today as is the US Dollar index which now appears comfortable above the key 80.00 level. It is the Federal Reserves apparent change of heart that is driving the recent bullishness within the US economy. Markets were very relieved yesterday to here Federal Chairwomen, Janet Yellen, backtrack on a recent ‘timing’ based commitment to raising US interest rates.

Yellen is now placing more stock in the key fundamental economic indicators of the health of the US recovery. Furthermore, rather than relying on predetermined targets for the big three indicators, GDP, Inflation and Unemployment, the Fed has distanced itself from previous statements which tied it’s actions to specific metrics.

Concerns were raised over the FOMC’s economic optimism following their recent policy meeting. These fears have now largely been allayed as the Fed is effectively admitting to the fragility of these early stages of the US recovery. Fundamental figures appear good and are all moving in the right direction, particularly when compared with the recoveries of other developed economies. The premise of the Fed is now aligned with that of the markets, essentially that although US figures are comparatively good that does not mean that they are overly solid and therefore there is no room for complacency.

Janet Yellen yesterday restored investor confidence by firstly admitting that the US economy has a long way to go and secondly by creating the space for the Fed to be more ‘accommodative’. This latter sentiment will most likely imply loose monetary policy for an extended period of time.

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