Economic update for the week ending February 13, 2016

Stocks rally Friday to make up some of the week’s losses – It was a volatile week for stocks as oil prices sunk to a 12 year low on Thursday. This pushed stocks down all week as low oil prices hurt economies in oil producing areas, states, countries, and energy companies. On Friday oil prices jumped 11.5%, the largest one day gain since 2009. U.S Crude oil closed Friday at $29.23, which was lower than last week but well above lows 12 year lows on Thursday. Stocks rose about 2% on Friday as oil prices improved. The The Dow Jones Industrial Average rose 313 points on Friday to close the week at 15,973.84, down from 16,204.97 last week. The S&P 500 closed the week at 1,864.78 down from 1,880.05 last week. The NASDAQ closed Friday at 4,337.51, down from 4,363.14 last week.
Bond yields drop – Investors continued to buy bonds this week driving rates down. At one point on Thursday the 10 year bond yield dropped under 1.6%. Yields rose Friday as stocks climbed to end the week higher than Thursday, but down from last week. The 10 year U.S. Treasury bond yield closed Friday at 1.74%, down from 1.84% last week. The 30 year U.S. Treasury bond yield closed Friday at 2.60%, down from 2.67% last week.
Mortgage rates at lowest levels in 3 years and near 50 year lows – The 30 year fixed rates below loan amounts of 419,000 are around 3.5%. 30 year rates for loans above 419,000 are about 3.75%. The 15 year fixed was around 2.875%. The 5 year was around 2.5%.
Retail sales climbed 0.2% in January – January marked the third straight monthly increase in retail sales. American consumers increased spending on automobiles, clothing and online purchases to begin 2016 with strong retail sales results.
Home affordability up slightly in the fourth quarter of 2015 – The California Association of Realtors reported that California’s home affordability index improved to 30% in the fourth quarter of 2015, from 29% in the third quarter. Year over year affordability slipped from 31% in the fourth quarter of 2014. They found that home buyers needed an income of $96,640 to purchase a $483,050 statewide median priced, existing single family home. Lower rates in the fourth quarter and slightly higher wages were attributed to the rise in affordability. Rates in 2016 have dropped over 1/2% so if that trend continues and rates stay at or near current levels affordability should improve, or at least remain at the same levels, even with the escalating price gains we are seeing to start the year!

Have a great weekend!