Economic update for the week ending October 14, 2017

Stocks continue to rise – Indexes again at new record highs – Stocks rose in the first week of the third quarter’s earnings season. Most of the companies that have released earnings have been from the financial service sector. Of the companies that have reported, 81% had better-than-expected results. The only sector that had a bad week was health insurance stocks, which dropped after President Trump signed an executive order to cut off subsidy payments to insurance companies that provide Obamacare. Economic data from overseas was extremely positive and confirmed that the worldwide economy is continuing to improve.┬áThe Dow Jones Industrial Average ended the week at 22,871.73, up from 22,773.67 last week. It’s up 15.7% year-to-date. The S&P 500 closed the week at 2,553.17, up from its close last week of 2,549.33. The S&P is up 14% YTD. The NASDAQ closed the week at 6,605.80, up from its last week’s close of 6,590.19. It’s up 22.7% year-to-date.

Bond yields lower this week – The 10-year Treasury bond closed the week at 2.28%, down from 2.37% last week. The 30-year treasury yield ended the week at 2.81%, down from 2.91% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates continue to creep up, yet the 30-year is still below 4% – The October 12, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.91%, up from 3.85% last week. The 15-year fixed was 3.21%, up from 3.15% last week. The 5-year ARM was 3.16%, down slightly from 3.18% last week. Rates were slightly lower at the end of the week.

U.S. Consumer Confidence highest rating in 13 years – The University of Michigan consumer sentiment index hit 101.1, the highest level since 2004. Since consumer confidence is directly related to consumer spending this index is closely watched as consumer spending accounts for approximately two-thirds of the economy. The survey also included data, which showed retail sales increased by 1.6% in September, the highest increase since March 2015.

Unfortunately, The California Association of Realtors and The National Association of Realtors have not released September sales figures. Those will be included in next week’s report.

Have a great weekend!

Syd