HINFO THAT HITS US WHERE WE LIVE... The collective will of everyone working in the housing market has certainly found the way to a housing recovery. More evidence of this came last week when a leading data and analytics firm reported that nationwide, home prices in May jumped 2.6% for the month and 12.2% since last year. That was the highest annual increase for their home price index in more than seven years. Their CEO commented, "...pent-up demand and continued low interest rates are fueling strong demand....

We expect that trend to continue to drive up prices throughout the balance of the summer months." But we do need to watch those interest rates. Friday, the chief economist at a real estate listings site pointed out, "Today's strong jobs report makes it more likely that the Fed will start reducing its bond purchases later this year, rather than waiting longer." Observers worry this tapering of the Fed's bond buying could push mortgage rates up, although they would still be at historically attractive levels. That same economist also pointed out, "Rising rates won't derail the housing recovery. They're rising alongside a strengthening economy."BUSINESS TIP OF THE WEEK...

Experts say only 20% of what we do each day produces 80% of our results. So during your workday, take note of and cut out all the things that don't matter. They'll have a minimal effect on your overall productivity. >> Review of Last WeekJULY 5 FIREWORKS... Wall Street enjoyed an extra day of pyrotechnics, as Friday's stronger than expected June Employment Report ignited a stock rally that left the three major indexes ahead two weeks in a row. Trading volume was low, with many players gone for the holiday weekend, but the good economic feelings were certainly valid. In June, nonfarm payrolls increased by 195,000, well above consensus expectations. Plus, April and May numbers were upwardly revised, adding 70,000 more jobs than had first been reported. In addition, hourly earnings were up a big 0.4% and aggregate earnings up 0.6%, which augers well for future consumer spending.That good June Employment Report still wasn't perfect, as the Unemployment Rate held at 7.6%. However, the "unrounded" 7.557% figure shows we're heading in the right direction.

Other glitches appeared in the form of a wider than expected $45 billion trade deficit for May and a drop in the ISM Services index for June, although it still registered expansion for the sector. The ISM index of manufacturing had a better story to tell, rebounding back into expansion territory after May's contraction. Also upbeat, Continuing Unemployment Claims fell by 54,000, to 2.93 million.The week ended with the Dow up 1.5%, to 15136; the S&P 500 up 1.6%, to 1632; and the Nasdaq up 2.2%, to 3479. Friday's Employment Report started a selling spree in bonds on concerns the improving economy will cause the Fed to begin tapering bond purchases sooner, depressing bond prices.

The FNMA 3.5% bond we watch ended the week down 2.83, at $98.31. National average mortgage rates fell for the week ending July 3, according to Freddie Mac's Primary Mortgage Market Survey. But this was before Friday's jobs report sent bond prices south, which will edge rates up. Mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. Of course, rates are still at attractive levels.DID YOU KNOW?... May's wider trade deficit was mostly due to a $4.4 billion increase in imports, led by consumer goods. This gain shows the resilience of U.S. purchasing power, for both consumers and businesses. >> This Week's Forecast JOBLESS CLAIMS, INFLATION HOLDING, CONSUMERS HAPPIER, WHAT THE FED SAID... Another quiet-ish summer week, economic data wise. Following the June Employment Report surprise, the coming Initial and Continuing Unemployment Claims reports shouldn't contain any shockers, but are expected to remain at the lower levels we've been seeing. Wholesale price inflation for June, measured by the Producer Price Index (PPI), is predicted to stay within Fed guidelines.Consumers, whose spending is vital to the economy, are forecast to be feeling a little better according to the July Michigan Consumer Sentiment Index. Wednesday, the Fed will release the FOMC Minutes from their June 19 meeting. These will be scoured for signs of how soon the central bank may begin tapering its bond purchases. >> The Week's Economic Indicator CalendarWeaker 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 July 8 - July 12 DateTime (ET)ReleaseForConsensusPriorImpactWJul 1010:30Crude Inventories7/6NA-10.347MModerateWJul 1014:00FOMC Minutes6/19NANAHIGHThJul 1108:30Initial Unemployment Claims7/6345K343KModerateThJul 1108:30Continuing Unemployment Claims6/292.949M2.933MModerateThJul 1110:00Federal BudgetJunNA-$59.7BModerateWJul 310:30Producer Price Index (PPI)Jun0.3%0.5%ModerateFJul 1208:30Core PPIJun0.1%0.1%ModerateFJul 1208:30Univ. of Michigan Consumer SentimentJul84.884.1Moderate>> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months... No matter how soon the Fed begins to taper their bond buying program, economists do not expect the central bank to touch its super low Funds Rate until well into 2014. 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%After FOMC meeting on:Consensus Jul 310%-0.25%Sep 180%-0.25%Oct 300%-0.25%Probability of change from current policy:After FOMC meeting on:Consensus Jul 31 <1%Sep 18 <1%Oct 30 <1%UIE