Economic update for the week ending October 15, 2016

Stocks down this week as companies begin to report 3rd quarter profits – The week began with disappointing 3rd quarter profits from a few early reporting companies. Alcoa and others shocked investors with weak results which caused markets to sell off sharply. By the end of the week Citi and JP Morgan Chase reported higher than expected profits which caused stocks to make up some of the week’s loses, and gave hope to investors that, as more companies report, profits may be better than they felt at the beginning of the week. Other news this week was that: Oil hit a high for the year at over $51 a barrel. Minutes released from the September Fed meeting has investors feeling that The Federal Reserve will raise rates at the December meeting. A drop in Chinese manufacturing has caused renewed concerns on the strength of China’s economy. The Dow Jones Industrial Average closed the week at 18,138.38% down from 18,240.49 last Friday. The S&P 500 closed the week at 2,132.98%, down from 2,153.74 last week. The NASDAQ closed the week at 5,214.16, down from last week’s close of 5,291.40.

U.S. Treasury Bond yields higher this week – Fears of higher rates has pushed bonds up again this week. The 10 year U.S. Treasury Bond yield closed the week at 1.80% up from 1.73% last Friday. The 30-year U.S. Treasury Bond closed at 2.55% up from 2.46% last week. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates edge up this week – The Freddie Mac Primary Mortgage Survey released on October 13 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.47%. The 15-year fixed average rate was 2.76%. The 5/1 ARM average rate was 2.82%. I’d expect to see rates a little higher again next week based on where we were at the end of the week. 

China tops list of foreign buyers for fourth year – According to a survey from The National Association of Realtors, China ranked first among foreign nationals purchasing property in the U.S. for the fourth straight year. U.S. Home sales totaled $27.3 billion. That exceeded the total of the next 4 countries combined. 

September home sales figures will be released next week by The California Association of Realtors. Pending sales were up slightly in August. If those pull through to closing closed sales should remain strong. We shall see next week. 

Have a great weekend!