Category: Economic Update

Stock markets up for second straight week – Stocks ended the week higher again as first quarter corporate profits began to be reported. Profits were stronger than expected and stocks rose. Profit season was a welcome relief to investors as it seems to distract from almost two months of uncertainty caused by trade and tariff fears, and political turmoil. While fears of a trade way still remain, as well as the prospects of higher interest rates, investors remain bullish. They feel that the tax cuts and increased spending will keep the economy strong through 2018 and 2019. The Dow Jones Industrial Average closed the week at 24,462.91, up from last week’s close of 24,306.14. It is down 1% year-to-date. The S&P 500 closed the week at 2,670.14, up from 2,656.39 last week. It’s down 0.1% year-to-date. The NASDAQ closed at 7,146.13, up from 7,106.55 last week. It is up 3.5% year-to-date.

Treasury Bond yields sharply higher this week – The 10-year treasury bond closed the week yielding 2.96%, up from 2.82% last week. The 30-year treasury bond yield ended the week at 3.14%, up from 3.03% last week.

Mortgage Rates higher this week – The April 19, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.47%, slightly above last week’s 4.44%. The 15-year fixed was 3.94%, up from 3.87% last week. The 5-year ARM was 3.67%, up from 3.61% last week. Rates were higher at the end of the week, so next week’s rates will be higher. 

California home sales up slightly – Home prices show year-over-year double digit increases in Los Angeles – The California Association of Realtors reported that existing, single-family home sales totaled 423,990 in March on a seasonally adjusted annualized rate. That represented a 1.6% increase from last March’s sales pace.

The median price of a home in March in California was $565,830, up 8.9% from March 2017. The median price in Los Angeles County rose 13.6% year-over-year from last March. It was the fourth straight month of double digit year-over-year increases. Ventura County showed the smallest year-over-year increase in the state with the median price growing just 1.8%. Inventory levels statewide remained at historic lows. The unsold inventory index dropped to a 2.9 month supply in March, down from a 3-month supply in March 2017. This historic low inventory is pushing prices higher.

Have a great weekend!

Syd

Stocks rebound as fears of trade war lower – Stocks gained about 2% this week after two weeks of drops. It was the sixth straight week that the S&P dropped or gained over 1%. Investors reacted positively as both the U.S. and China seemed to dial back the Dow Jones Industrial Average closed the week at 24,306.14, up from last week’s close of 23,932.76. It is down 1.5% year-to-date. The S&P 500 closed the week at 2,656,39, up from 2,604.47 last week. It’s down 0.6% year-to-date. The NASDAQ closed at 7,106.55, up from 6,915.11 last week. It is up 0.6% year-to-date.

Treasury Bond yields slightly higher this week – The 10-year treasury bond closed the week yielding 2.82%, up from 2.77% last week. The 30-year treasury bond yield ended the week at 3.03%, up slightly from 3.01% last week.

Mortgage Rates stable this week – The April 12, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.42%, slightly above last week’s 4.40%. The 15-year fixed was 3.87%, unchanged from 3.87% last week. The 5-year ARM was 3.61%, down slightly from 3.62% last week.

Have a great weekend!

March job gains below expectations – The Department of Labor Statics reported that the U.S. economy added 103,100 new jobs in March. That fell well below analysts’ expectations of 193,000 new jobs. To be fair, February’s gains of 313,000 new jobs was over 100,000 more jobs than analysts had expected in February, so year-to-date we are over the number expected with an average of 201,000 new jobs monthly. March marked the 90th straight month of job gains. Unemployment remained unchanged for the sixth consecucitive month at 4.1%, the lowest rate since 2000. The unemployment rate has dropped from it’s peak of 10% in 2009. Wages, the most highly anticipated part of the report, grew 2.7% from last March. That was above the 2.6% year-over-year wage gains reported in February, and below the 2.9% year-over-year increase in January.

U.S. Stocks fall in turbulent week – It was another volatile week for stocks with huge daily swings. The week started with stocks down after China announced about $3 billion in tarriffs on U.S. goods. Later in the week, The Trump administration responded with proposed tarriffs of $50 billion on 1,300 Chinese products. China responded with $50 billion of tarriffs on U.S. airplanes, aerospace, and agriculture products. It should be noted that none of these tarriffs have actually been put in place. The markets have shifted day to day as investors weighed whether there will actually be a trade war, or if both sides are just posturing, as negotiations are ongoing. The March jobs report had very little effect on the markets. While new jobs were fewer than expected in March, job gains have still averaged a healthy 201,000 a month in 2018. Wage gains were in line with expectations.

The Dow Jones Industrial Average closed the week at 23,932.76, down from last week’s close of 24,103.11. It is down 3.2% year-to-date. The S&P 500 closed the week at 2,604.47, down from 2,649.87 last week. It’s down 2.6% year-to-date. The NASDAQ closed at 6,915.11, down from 7,063,44 last week. It is up 0.2% year-to-date.

Treasury Bond yields slightly higher this week – The 10-year treasury bond closed the week yielding 2.77%, up from 2.74% last week. The 30-year treasury bond yield ended the week at 3.01%, up from 2.97% last week.

Mortgage Rates slightly lower this week – The April 6, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.40%, down from last week’s 4.44% The 15-year fixed was 3.87%, down from 3.90% last week. The 5-year ARM was 3.62%, down from 3.66% last week. Rates were slightly lower on Friday.

Have a great weekend!

Syd

Trade talks lift stocks – Stocks rose by over 2% this week as volatility continued in the financial markets. Huge swings have continued over the last 8 weeks as investors weigh new information and speculation on global trade, political uncertainty, monetary policy, a new Federal Reserve Chairman, a new Treasury Secretary nominee, and corporate profits. This week, negotiations with China led investors to believe that a trade war may be averted. Stocks made up most of the previous week’s loses when stocks were rocked by China’s response of placing tariffs on U.S. goods in retaliation to the Trump administration’s tariffs placed on Chinese goods. The Dow Jones Industrial Average closed the week at 24,103.11, up from last week’s close of 23,533.20. It is down 2.5% year-to-date. The S&P 500 closed the week at 2,649.87, up from 2,588.26 last week. It’s down 1.2% year-to-date. The NASDAQ closed at 7,063.44, up from 6,992.67 last week. It is up 2.3% year-to-date.

Stocks were down for the second consecutive month  – The Dow Jones Industrial Average closed the month at 24,103.11, down from its February 28, 2018 close of 25,029.20, which was down over 1,000 points from its January 31, 2018 close of 26,076.89. It has dropped almost 2,000 points in two months. The S&P 500 closed the month of March at 2,649.87, down from its February 28, 2018 close of 2,713.83. The NASDAQ closed the month at 7,063.44, down form its February 28 close of 7,273.01.

Treasury Bond Yields –  Bond yields lower this week – The 10-year treasury bond closed the week yielding 2.74%, down from 2.82% last week. It was 2.87% on February 28, 2018. The 30-year treasury bond yield ended the week at 2.97%, down from 3.06% last week. The 30-year was 3.13% on February 28. We watch bond rates because mortgage rates follow bond rates.

Mortgage Rates almost unchanged this week – The March 29, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.44%, unchanged from last week’s 4.45% The 15-year fixed was 3.90%, unchanged from 3.91% last week. The 5-year ARM was 3.66%, unchanged from 3.68% last week. Rates were slightly lower on Friday. Expect next week’s survey to have rates slightly lower. For the month, rates were unchanged from rates on March 1.

U.S. existing home sales bounce back in February – Prices continue to rise – The National Association of Realtors reported that total existing home sales, which are recorded transactions of all single family homes, townhomes, condominiums, and co-ops, grew 3% in February. In the first two months of 2018, sales are 1.1% above the same period last year. The median price paid for a home in the U.S. increased by 5.9%, from February 2017. That marked the 72nd straight month of year-over-year price increases. The unsold inventory index stood at a 3.4 month supply in February, down from 3.8 months in February 2017. Year-over-year inventory levels have fallen for 33 consecutive months.

California existing home sales pick up in February – The California Association of Realtors announced that existing home sales totaled 422,910 on a seasonally adjusted annualized rate in February. That represented a 3.3% increase from the number of sales in January, and a 5.4% increase from last February’s number of sales. Prices also increased with the statewide median price $522,440, an increase of 8.8% from one year ago. After hitting a 14-year low in December, the number of homes for sale increased for a second straight month. The unsold inventory index rose to a 3.9-month supply of homes in February, up from a 3.6-month supply in January. There was a 4 month supply of homes for sale in February 2017.

Have a great weekend! Happy Passover and Easter, or anything else you are celebrating!

Syd

Stocks drop 6% in the worst week since January 2016 – U.S. stock markets fell 6% this week as investors feared that new tarriffs on imports could start a global trade war. The Federal Reserve also raised their benchmark interest rates. This was expected just a few weeks ago, but many experts felt the Fed would hold off on an increase because stocks have been so volatile in the last couple of weeks. Stocks have dropped 10% in just a month. The Dow Jones Industrial Average closed the week at 23,533.20, down from last week’s close of 24,946.51. It is down 4.8% year-to-date. The S&P 500 closed the week at 2,588.26, down from 2,752.01 last week. It’s down 3.2% year-to-date. The NASDAQ closed at 6,992.67, down from 7,484.99 last week. It is up 1.3% year-to-date.

Treasury Bond Yields –  Bond yields lower this week – The 10-year treasury bond closed the week yielding 2.82%, down from 2.85% last week. The 30-year treasury bond yield ended the week at 3.06%, down from 3.08% last week. We watch bond rates because mortgage rates follow bond rates.

Mortgage Rates stable this week – The March 22, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.45%, unchanged from last week’s 4.44%. The 15-year fixed was 3.91%, unchanged from 3.90% last week. The 5-year ARM was 3.68%, unchanged from 3.67% last week.

California existing home sales pick up in February – The California Association of Realtors announced that existing home sales totaled 422,910 on a seasonally adjusted annualized rate in February. That represented a 3.3% increase from the number of sales in January, and a 5.4% increase from last February’s number of sales. Prices also increased with the statewide median price $522,440, an increase of 8.8% from one year ago. After hitting a 14 year low in December, the number of homes for sale increased for a second straight month. The unsold inventory index rose to a 3.9 month supply of homes in February, up from a 3.6 month supply in January. There was a 4 month supply of homes for sale in February 2017.

Have a great weekend!

Syd

313,000 new jobs added in February – Wage growth moderates – The Department of Labor Statistics reported that U.S. employers added 313,000 new jobs in February. It was the economy’s largest monthly gain in jobs since July 2016. This crushed analysts’ expectations of 203,000 new jobs. The unemployment rate remained unchanged at 4.1% for the fifth straight month. Wage growth moderated and rose by just 2.6% from last February. Wages, which have been pretty stagnant for several years, rose by an unexpected 2.9% year-over-year in January. Experts have been puzzled as to why wages are not growing at a faster pace. Higher wage growth would be expected in an economy that has reached what is considered full employment. January’s 2.9% led investors to believe that wages were finally on the rise at more healthy levels, which The Fed targets at around 3%. Rising wages gives people more money to spend which leads to more inflation. Higher inflation drives interest rates up. Inflation has also been below The Fed’s target rate. After the January wage growth of 2.9% was announced, interest rates rose as investors felt inflation was about to pick up to more normal levels. Wages were the most anticipated part of the jobs report this month, as investors wanted to see if January’s wage growth was an outlier, or the start of a trend. Today‘s report suggests that January’s 2.9% may have just been an outlier, not a trend. Everybody will now have to wait until March’s jobs numbers, which will be released the first Friday of April to see if wages are finally rising at more normal levels.

Stock markets end week up 3.5% – Stocks rose this week making up the losses suffered last week after President Trump announced that he was going to place tariffs on steel and aluminum imports to help American metal manufacturers. Thursday, President Trump excluded Canada and Mexico from steel and aluminum tariffs. This was a deviation from last week’s pledge of tariffs on all steel and metal  imports. With almost all companies reported, 75% of companies reported that their fourth quarter profits beat expectations. 313,000 new non-farm jobs were added to the economy in February. That exceed expectations by over 100,000! Wage gains, which scared the markets in January, moderated in February reducing the risk of inflation. The Dow Jones Industrial Average closed the week at 25,335.74, up from last week’s close of 24,538.06. It is up 2.5% year-to-date. The S&P 500 closed the week at 2,786.57, up from 2,692.25 last week. It’s up 4.2% year-to-date. The NASDAQ closed at 7,569.81, up from 7,257.87 last week. It is up 9.5% year-to-date.

Treasury Bond Yields –  The 10-year treasury bond closed the week yielding 2.90%, up slightly from 2.86% last week. The 30-year treasury bond yield ended the week at 3.16%, up slightly from 3.14% last week. We watch bond rates because mortgage rates follow bond rates.

Mortgage Rates slightly higher this week – The March 8, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.46%, up slightly from last week’s 4.43%. The 15-year fixed was 3.94%, up from 3.90% last week. The 5-year ARM was 3.63%, down from 3.62% last week.

Stock markets drop sharply in the last week of February and first two days of March – Stock markets dropped in four out of five sessions in volatile trading this week. The week began with Federal Reserve Chairman, Jerome Powell’s testimony to Congress. In his first congressional update he stated that he would raise short-term interest rates at a faster pace than his predecessor. He testified that the economy was strong and inflation was tame, but stated that historical low interest rates were not needed to stimulate an already robust economy. Investors sold stocks in fears that higher interest rates will increase borrowing costs and cut into corporate profits. Later in the week, President Trump announced that he planned to place tariffs on steel and aluminum imports in an effort to help U.S. metal companies. That sparked another sell off as many U.S. companies purchase imported steel and aluminum. Their costs will be increased, which will increase the cost of their products, which include: cars, trucks, soda cans, building materials, etc. Another fear is that although the U.S. has a huge trade deficit, we still are among the biggest exporters of goods in the world. It is feared that other countries may retaliate and place tariffs on U.S. goods. That would hurt many industries. The Dow Jones Industrial Average closed the week at 24,538.06, down sharply from last week’s close of 25,309.99. It is down 0.7% year-to-date. The S&P 500 closed the week at 2,691.25, down from 2,747.30 last week. It’s up 0.7% year-to-date. The NASDAQ closed at 7,257.87, down from 7,337.39 last week. It is up 4.7% year-to-date.

Treasury Bond Yields –  The 10-year treasury bond closed the week yielding 2.86%, down slightly from 2.88% last week. The 30-year treasury bond yield ended the week at 3.14%, down slightly from 3.16% last week. We watch bond rates because mortgage rates follow bond rates.

Mortgage Rates slightly higher this week – The March 1, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.43%, up slightly from last week’s 4.40%. The 15-year fixed was 3.90%, up from 3.85% last week. The 5-year ARM was 3.62%, down from 3.65% last week.

U.S. Pending Home Sales Index drops 4.7% – The National Association of Realtors announced that it’s pending home sale index, which is based on the number of contracts signed in January for existing home purchases, dropped 4.7% from December. It was the lowest number of pending sales since October 2014. Year-over-year existing home sales were 3.8% lower than last January. Extremely low housing inventory was blamed on the drop in sales. The number of active listings were down 9.5% in January from the number of listings in January 2017. The number of existing homes listed for sale in the U.S. was the lowest ever recorded in January.

Southern California median price increased 11.4% in January – CoreLogic/DataQuick announced that the median price paid for a home in the six county region increased 11.4% in January from one year ago. The median price was $507,000 in January. It was the highest year-over-year increase in the median price in 44 months.

The February jobs report will be released next Friday. Wage gains will be the most pertinent part of the report. Interest rates rose after January’s report showed that average hourly wages rose at the fastest rate since 2010 in January. That caused investors to fear higher inflation was on the way. The February report will show if January’s wage increase was an outlier, or the start of a trend after years of stagnant wages.