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US Mortgage Applications Rise Again

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US Mortgage Applications Rise Again

The Mortgage Bankers Association has just published this week’s Mortgage Applications data. New applications have risen 4.3% on the week following on from last week’s 1.6% drop.

These slight blips in the mortgage figures are not cause for concern, the US housing recovery is robust and it is natural to notice some volatility in short term indicators such as this.

Federal Reserve chair, Janet Yellen, will this evening address the Economic Club of New York. Basking in the recent acclamation from the International Monetary Fund (IMF) it is likely to be an upbeat speech from Yellen. Markets however will be watching for two things in particular.

Firstly, how the Fed intends to react, if it reacts at all, to the recent upgrade to the US growth forecasts. There is now wide acceptance of the Fed’s long term plans to maintain their ‘accommodative’ stance towards monetary policy. If, as it now looks, that the recovery is taking hold at a faster pace than originally allowed for, will this truncate the Fed’s accommodative timeline. The Federal Reserve tends not to do surprises and so it is a speech like this evenings that would be used to subtly tee up any change to policy outlook.

Secondly, although the IMF commended the US authorities for their handling of the economy they also took the opportunity to outline some potentially problematic areas of the US recovery. Prime among these is the country’s apparent dependence on consumer lead growth to fuel the economic come back, the IMF was very clear that the US is not investing enough in the economy. This comment was mainly aimed at the US Fiscal authorities who the IMF are suggesting have neglected infrastructural opportunities that would create construction jobs and facilitate longer term growth. Comments from the Fed on the Governments performance will be watched for with interest.

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