The main course was a read on inflation, by way of high powered economic reports and comments from a concerned Federal Reserve Board. The Fed Meeting Minutes revealed that the Fed remains wary of the amount of inflation persisting in the economy, but more members than not are willing to be patient a little bit longer, to allow time for their string of seventeen rate hikes to fully filter through the economy. And the reports of the week did show inflation pulling back slightly more than expected, on both the producer or wholesale side, and the retail or consumer side. And lower retail inflation is good news in more ways than one, as many hit the holiday shopping season full blast this coming week.

There was also a side of news on the Housing Sector, showing it continues to cool from the overheated levels of recent years. Housing Starts of new homes fell a bit more than expected, and Building Permits, an indication of future building activity, were also reported below expectations. This cooling in the housing market could lead to a drag on the economy, which would work towards lower inflation as well.

EVEN OUR CURRENCY IS HAVING TO FATTEN UP DUE TO INFLATION…THIS WEEK’S MORTGAGE MARKET VIEW LOOKS AT THE INTRIGUING REASONS THAT THE TWO DOLLAR BILL IS MAKING A BIG COMEBACK.

With a holiday-shortened week, little news, and thinly-manned trading desks, Bond prices and home loan rates should stay fairly stable. It wouldn’t be a surprise to see Bonds get forced back beneath the tough ceiling they’ve been fighting for so long, but the move will not likely be dramatic enough to see a change in home loan rates.

The $2 bill - once stashed in souvenir drawers and birthday cards or tucked away in hopes of becoming a collector’s item - is back in action.

The $2 bill dates back to 1862, was redesigned several times, and was even discontinued in 1966 due to the bill’s low use and unpopularity. How can currency become unpopular? Retailers often mistook it for a $20 bill and gave incorrect change…not to mention the problem of where to put it in the cash register drawer! But now, the $2 bill is shedding its unpopular past and being used more and more every day - why?

Partly due to inflation - those little services or items that once cost a dollar or less have now crept over $2 due to inflation. And how about small tips, such as when you’re checking into a hotel? Not too many years ago, a patron may have tipped a bellman with $1 bills for bringing up the luggage. But with inflation on the rise, patrons today are pulling out $2 bills and handing them to the bellman for the exact same service. And the $2 bills take up less room in your wallet than the wad of $1’s often carried for tips. Additionally, the $2 bill is common in other currencies - so visitors or incoming residents from other countries are accustomed to using $2 bills, and commonly ask for $2 bills when exchanging money.

So if you decide to pull out that stash of $2 bills from the souvenir drawer and go on a spending spree, watch your change carefully, as many retailers and cashiers are still not used to exchanging money with the two-dollar denomination. And believe it or not - don’t be alarmed if the cashier refuses to accept the payment at first…a recent Taco Bell patron attempted to pay for a burrito with a two dollar bill, and the cashier and manager both refused to accept it as valid currency. When the patron insisted, the cashier and manager phoned security. The security guard actually had to inform the cashier and manager that yes indeed - two dollar bills are actually valid US currency.

Economic Calendar for the Week of November 20 – November 24