Economic update for the month of June and week ending July 2

Stocks have a wild week and end the month higher in June – Stock markets were fairly stable in June until the last week when stocks fell sharply after The British people voted to leave the European Union. By Monday all markets had dropped significantly, but the markets rallied to end the month up making up all the losses in the last three days. The Dow Jones Industrial Average closed the month at 17,929.99, up from it’s close last month of 17,787.31 on May 31. The S&P 500 closed the month at 2,098.86, just slightly above 2,096.95 on May 31. The NASDAQ closed May 31 at 4,842.67, down from 4,948.05 at the end of May. 

For the week ending July 2 – Stocks post best 4 day streak since February – The Dow Jones Industrial Average closed the week at 17,949.37, up significantly from 17,400.75 last Friday. The S&P 500 closed the week at 2,102.95, up from 2,037.41 last week. The NASDAQ closed the week at 4,862.57, also up from last week’s close of 4,707.98.

Bond yields fall to lowest levels in decades – The 10 year U.S. Treasury bond yield closed June at 1.49%, down significantly from 1.85% on May 31. The 30 year U.S. Treasury bond closed June 30 at 2.30%, down from 2.63% at the end of May. Mortgage rates follow bond rates so we watch bond rates carefully.

Bond yields drop again this week – The 10 year U.S. Treasury bond yield closed the week at 1.46%, down from 1.52% last Friday. The 30-year U.S. Treasury bond closed at 2.24%, down slightly from 2.42% last week.  

Mortgage rates at historic low levels – The Freddie Mac Primary Mortgage Survey released on June 30, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.48%. The 15-year fixed average rate was 2.78%. The 5/1 ARM average rate was 2.70%.  

California’s unemployment rate dips to 5.2% – The Employment Development Department reported that California employers’s added 15,200 net new jobs in May. While the number of new jobs added was below what analysts expected, the unemployment rate fell from 5.3% in April to 5.2% in May. The unemployment rate in May 2015 was 6.4%, so being at 5.2% is a 1.2% drop year over year! 

Federal Reserve leaves rates unchanged in June – Amid worries of slowing job growth, The Federal Open Market Committee declined to raise it’s interest rate target at this week’s two day meeting from 0.5%. Fed chairperson, Janet Yellen signaled late last year that there could be as many as 6 increases in 2016. As the labor market growth has slowed and economic growth no longer at last year’s levels, Fed officials are signaling that there may only be one or two increases in 2016. 

California existing home sales and prices up in May – The California Association of Realtors reported that existing home sales in California totaled 410,190 in May on a seasonally adjusted annual rate. That is up 0.6% from April and down 3.2% from last May. Tight inventory has impacted the number of sales, as there was just a 3.4 month supply of homes on the market in May, down from 3.5 months in April. A 6-7 month supply is considered normal. The median price paid for a single family home in California rose to $518,760 in May from $509,590 in April. 

Pending home sales rise in California – The California Association of Realtors 
reported on Thursday that statewide pending existing home sales rose 3.8% in May from May 2015. This was welcome news as year over year closed home sales dropped dropped in May on a year over year basis. They also reported that pending home sales in Southern California rose 5.6% on a year over year basis compared to May 2015. We look at pending sales to gage what closed sales will be a month or two later when they close.

U.S existing home sales hit their highest pace in over a decade – The National Association of Realtors reported that total existing home sales, which include single family homes, condos, town-homes, and co-ops, were up 4.5% in May from May 2015. The total number of sales on a annualized adjusted rate was 5.53 million homes in May 2016. May was the highest annual pace since February 2007 when sales hit 5.79 million. 

U.S. Pending home sales lower in May – After three months gains in pending home sales, measured by homes that went under contract, The National Association of Realtors announced that pending home sales in May slipped 3.7% from April’s figures. Year over year pending sales were down 0.2% from last May. Tight inventory is thought to be the reason for sales being off. Pending sales which include resale, not new homes, include single family homes, condos, town houses, and co-ops. 

The markets are all waiting for the monthly jobs report. They come out on the first Friday of every month, but not when Friday is the first of the month. Next Friday we will have June’s job figures. 

Have a great 4th of July Holiday weekend!