Economic Update for the week ending July, 16, 2016

Stocks rise again this week – Stocks were up for a third week in a row reaching a series of record highs. The sharp rebound has been fueled by better than expected economic data, higher expectations for second quarter corporate earnings, and low interest rates. The Dow Jones Industrial Average closed the week at 18,516.55, up from 18,146.75 last Friday. The S&P 500 closed the week at 2,161.75, up from 2,129.90 last week. The NASDAQ closed the week at 5,029.50, up from last week’s close of 4,956.76.

Bond yields rise this week – After dropping steadily for 3 straight weeks bond yields rose this week. The 10 year U.S. Treasury bond yield closed the week at 1.60%, up from 1.37% last Friday. The 30-year U.S. Treasury bond closed at 2.30%, up from 2.11% last week. Mortgage rates follow bond yields so expect mortgage rates to rise slight next week. 

Mortgage rates – Mortgage rates were slightly higher this week, yet still near historic lows. The Freddie Mac Primary Mortgage Survey released on July 14, 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 3.42%. The 15-year fixed average rate was 2.72%. The 5/1 ARM average rate was 2.76%.

Industrial production outpaces expectations in June – Industrial production rose 0.6% in June, it’s largest increase in 11 months, according to the Federal Reserve. Economists had forecasted a 0.3% increase. Robust auto production lifted the consumer durables category, as the output of consumer energy products also jumped. Manufacturing output rose 0.4% in June. But in the second quarter, factory output fell at an annual rate of 1%. The index for utilities climbed 2.4% due to warmer weather that increased demand for air conditioning. 

Retail sales beat expectations in June – The Commerce Department Reported that retail sales rose 0.6% in June. It was the third straight month of increases after sales seemed to be stalling in the beginning of the year. Sales are now up 2.7% from one year ago. Economists had expected just a 0.1% increase. 

Home sales figures for June should be available next week. They will include, number of sales, median price changes, and home inventory levels.

Have a nice weekend!