Category: Economic Update

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. The 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

U.S economy loses 33,000 jobs in September – Unemployment rate drops to 4.2% – Wages rise – The Bureau of Labor Statistics reported that the economy lost 33,000 jobs in September, which marked the first month in seven years that the U.S. lost jobs. The unemployment rate dropped to 4.2%, from 4.4% in August. Wages grew 2.9% from one year earlier. Analysts discounted the report, and it had little effect on the markets, because they felt that September’s hurricanes and storms skewed the numbers. According to experts, jobs lost due to hurricanes were lower paying jobs, so unfortunately, wages up nearly 3% was not a reliable figure. They expect wage growth to be closer to 2.5% next month. They also expect the number of new jobs to rebound next month, as employers resume hiring, which they delayed due to weather concerns. Workers also had temporarily stopped their job search, which made the unemployment figure appear lower. 

Markets hit record highs again this week – Stocks were up this week as encouraging economic data showed upward trends in the manufacturing and services sectors. Auto sales were also higher. While Friday’s September employment report was weak, experts felt that the impact from recent hurricanes skewed the numbers. They expect the economy to remain healthy. The Dow Jones Industrial Average ended the week at 22,773.67, up from 22,405.09 last week. It’s up 15.2% year-to-date. The S&P 500 closed the week at 2,549.33, up from its close last week of 2,519.36. The S&P is up 13.9% YTD. The NASDAQ closed the week at 6,590.19, up from its last week’s close of 6,495.96. It’s up 22.4% year-to-date. 

Bond yields rise – The 10-year Treasury bond closed the week at 2.37%, up from 2.33% last week. The 30-year treasury yield ended the week at 2.91%, up from 2.86% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates just slightly higher this week – The October 5, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.85%, almost unchanged from 3.83% last week. The 15-year fixed was 3.15%, almost unchanged from 3.13% last week. The 5-year ARM was 3.18%, almost unchanged from 3.20% last week. 

Home sales figures for September should be available next week. 

Have a great weekend!

Syd

Stock markets end September at record highs – Stock market indexes closed the week at record levels. Stocks have soared as investors were encouraged by the prospects of lower corporate tax rates. The White House released its proposed tax plan, which would cut the corporate tax rates from 35% to 20%. Oil also rose to just over $51 per barrel, which bolstered energy stocks. The Dow Jones Industrial Average ended the month at 22,405.09, up from its August 31 close of 21,948.10. The Dow is up over 13.4% year-to-date. The S&P 500 closed the month at 2,519.36, up from its August close of 2,471.65. The S&P is up 12.5% year-to-date. The NASDAQ closed the month at 6,495.26, up from last month’s close of 6,428.66. It’s up 20.5% year-to-date.  

Treasury Bond yields higher in September – The 10-year Treasury bond closed on September 29, 2017 at 2.33%, up from 2.17% at the end of August. The 30-year treasury yield ended the month at 2.86%, up from 2.73% last month.

Mortgage Rates remain near historic lows – The 30-year fixed mortgage rate remained under 4% in September. The September 28, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.83%, almost unchanged from 3.82% on August 31, 2017. The 15-year fixed was 3.13%, unchanged from last month’s close of 3.12%. The 5-year ARM was 3.20%, up from 3.14% on August 31, 2017. 

Employers add 157,000 new jobs in August – The Labor Department reported that The U.S. Economy added 157,000 non-farm jobs in August. Economists had expected a gain of 180,000 new jobs. The unemployment rate grew to 4.4% from 4.3% in July. Wage growth also stalled growing just .1% over July and up just 2.5% from last August. The September figures will be out next Friday. September figures will be included on the monthly economic post card and email.

Consumer Prices rise in August – The Labor Department reported that its Consumer Price Index rose 0.4 percent in August after edging up just 0.1 percent in July. August’s gain was the largest in seven months and lifted the year-on-year increase in the CPI to 1.9 percent from 1.7 percent in July. Economists had forecast the CPI rising 0.3 percent in August and climbing 1.8 percent year-on-year. Gasoline prices surged 6.8% for consumers as refineries shut down due to hurricanes. This should just be a temporary spike and added to the CPI increase. The Core CPI, which strips out volatile food and energy, increased 0.2% in August. Year-over-year Core CPI has increased 1.7%. Inflation, while a little higher in August, is still below the Fed’s target level. We watch inflation because higher inflation drives interest rates up. Low inflation keeps rates tame.

California home sales and prices continue to rise in August – The California Association of Realtors released its August Sales and Price Report. Despite tight inventory existing, single family home sales totaled 427,630 in August on a seasonally adjusted annualized rate. That represented a 1.5% increase month-over-month from July and a 1.3% increase from last August. The Los Angeles region registered a 4.4% gain in the number of sales year-over-year. The median price paid for a home in California was $565,330, up 2.9% from July and 7.2% from August 2016. C.A.R.’s Unsold Inventory Index fell to a 2.9-month supply of housing in August, down from 3.2 months in July, as there were too few new listings to keep up with strong sales growth. 

U.S. Existing home sales slightly lower in August – Existing home sales data released by The National Association of Realtors showed that existing-home sales dropped 1.7% on a seasonally adjusted annual rate in August from July’s sales levels, as tight inventory has affected home sales. For the year, the number of existing homes sold on a seasonally adjusted annual rate in August was 0.2% above last August’s sales pace. Prices continue to rise nationally. The median price aid for a home in August was 5.6% higher than one year ago. Housing inventory continued to decline. The number of homes for sale declined 6.5% from August 2016. The 27th straight month of year-over-year declines in inventory levels. The unsold inventory index dropped to a 4.2 month supply, down from 4.5 months one year ago.

Economic update for the week ending September 30, 2017

Markets close the week again at record highs – Stock market indexes closed the week at record levels. Stocks have soared as investors were encouraged by the prospects of lower corporate tax rates. The White House released its proposed tax plan, which would cut the corporate tax rates from 35% to 20%. Oil also rose to just over $51 per barrel which bolstered energy stocks. The Dow Jones Industrial Average ended the week at 22,405.09, up from 22,349.59 last week. It’s up 13.4% year-to-date. The S&P 500 closed the week at 2,519.36, up from its close last week of 2,502.22. The S&P is up 12.5% YTD. The NASDAQ closed the week at 6,495.96, a record high, up from its last week’s close of 6,426.22. It’s up 20.7% year-to-date. 

Bond yields higher this week – The 10-year Treasury bond closed the week at 2.33, up from 2.26% last week. The 30-year treasury yield ended the week at 2.86%, up from 2.80% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates unchanged this week – The September 28, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.83%, unchanged from 3.83% last week. The 15-year fixed was 3.13%, unchanged from 3.13% last week. The 5-year ARM was 3.20%, up from 3.17% last week. 

Have a great weekend!
Syd

Stocks hit record highs again this week – Stocks were slightly higher this week following large gains the previous week. The Federal Reserve announced that it would begin its balance sheet normalization program next month. They will slowly sell off bonds and mortgage securities they purchased during the recession to help the housing market, lower long term rates, and add liquidity to the economy. They also announced that they would keep the federal funds rate between 1% and 1.25%, which was good news to investors. They said that while the labor market’s strong inflation is below 2%, which is lower than the Fed target rate. The Dow Jones Industrial Average ended the week at 22,349.59, up from 22,268.34 last week. It’s up 13.1% year-to-date. The S&P 500 closed the week at 2,50.22, up from its close last week of 2,500.23. The S&P is up 11.8% YTD. The NASDAQ closed the week at 6,426.22, down slightly from its all time high at last week’s close of 6,448.37. It’s up 19.4% year-to-date. 

Bond yields higher this week – The 10-year Treasury bond closed the week at 2.26%, up from 2.20% last week. The 30-year treasury yield ended the week at 2.80%, up from 2.77% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates rise this week – The September 21, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.83%, up from 3.78% last week. The 15-year fixed was 3.13%, up from 3.08% last week. The 5-year ARM was 3.17%, up from 3.13% last week. Rates were a little higher at the end of the week so next week’s survey rates could be higher. 

California home sales and prices continue to rise in August – The California Association of Realtors released its August Sales and Price Report. Despite tight inventory existing, single family home sales totaled 427,630 in August on a seasonally adjusted annualized rate. That represented a 1.5% increase month-over-month from July and a 1.3% increase from last August. The Los Angeles region registered a 4.4% gain in the number of sales year-over-year. The median price paid for a home in California was $565,330, up 2.9% from July and 7.2% from August 2016. C.A.R.’s Unsold Inventory Index fell to a 2.9 month supply of housing in August, down from 3.2 months in July, as there were too few new listings to keep up with strong sales growth. 

Have a great weekend!
Syd

Stock market indexes hit record highs – Markets closed the week at record highs as news that an outline of a tax reform plan would be released later this month. Recent compromise on other issues had investors feeling that tax cuts or tax reform could improve prospects for growth in the coming years. The Dow Jones Industrial Average ended the week at 22,268.34, up from 21,797.79 last week. It’s up 12.7% year-to-date. The S&P 500 closed the week at 2,500.23, up from its close last week of 2,461.43. The S&P is up 11.7% YTD. The NASDAQ closed the week at 6,448.37, up from last week’s close of 6,360.19. It’s up 19.8% year-to-date. 

Bond yields higher this week – The 10-year Treasury bond closed the week at 2.20%, up from 2.06% last week. The 30-year treasury yield ended the week at 2.77%, up from 2.67% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates unchanged last week – but higher by week’s end – The September 14, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.78%, unchanged from 3.78% last week. The 15-year fixed was 3.08%, unchanged from 3.08% last week. The 5-year ARM was 3.13%, down slightly from 3.15% last week. Rates rise at the end of the week and are now slightly higher. 

Consumer Prices rise in August – The Labor Department reported that its Consumer Price Index rose 0.4 percent in August after edging up just 0.1 percent in July. August’s gain was the largest in seven months and lifted the year-on-year increase in the CPI to 1.9 percent from 1.7 percent in July. Economists had forecast the CPI rising 0.3 percent in August and climbing 1.8 percent year-on-year. Gasoline prices surged 6.8% for consumers as refineries shut down due to hurricanes. This should just be a temporary spike and added to the CPI increase. The Core CPI, which strips out volatile food and energy, increased 0.2% in August. Year-over-year Core CPI has increased 1.7%. Inflation, while a little higher in August, is still below the Fed’s target level. 

Have a great weekend!
Syd

August new jobs disappoint – The Labor Department reported that The U.S. Economy added 157,000 non-farm jobs in August. Economists had expected a gain of 180,000 new jobs. The unemployment rate grew to 4.4% from 4.3% in July. Wage growth also stalled growing just .1% over July and up just 2.5% from last August. 

Stocks drop this week – Stock markets dropped this week following a disappointing August 2017 jobs report, and concerns about the cost of Hurricane Harvey and Hurricane Irma frightened investors. Investors were calmed by a deal to extend the debt ceiling and avoid a government shutdown for three months. The Dow Jones Industrial Average ended the week at 21,797.79, down from 21,978.56 last week. The S&P 500 closed the week at 2,461.43, down from its close last week of 2,476.55. The NASDAQ closed the week at 6,360.19, down from last week’s close of 6,435.33.   

Bond yields lower this week – Bond yields hit the lowest levels in over a year – The 10-year Treasury bond closed the week at 2.06%, down from 2.16% last week. The 30-year treasury yield ended the week at 2.67%, down from 2.76% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates near 18 month low – The September 7, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.78%, down from 3.82% last week. The 15-year fixed was 3.08%, down from 3.12% last week. The 5-year ARM was 3.15%, almost unchanged from 3.14% last week. Rates at the end of the week were slightly lower. 

Have a great weekend!
Syd

Stocks up again this week – Stock markets finish higher in August – Stocks finished higher for the second straight week. A revised second quarter GDP report revealed that growth reached 3% for the first time since 2015. Renewed reports of tax reform and better manufacturing data moved markets up this week – The Dow Jones Industrial Average ended the week at 21,978.56, up from 21,814.67 last week. The S&P 500 closed the week at 2,476.55, up from its close last week of 2,443.05. The NASDAQ closed the week at 6,435.33, up from last week’s close of 6,265.64.

Bond yields unchanged this week – Remaining near the lowest levels of the year – The 10-year Treasury bond closed the week at 2.16%, almost unchanged from 2.17% last week. The 30-year treasury yield ended the week at 2.76%, slightly up from 2.75% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates lower this week – The August 31, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.82%, down slightly from 3.86% last week. The 15-year fixed was 3.12%, down slightly from 3.16% last week. The 5-year ARM was 3.14%, down from 3.17% last week.

Economic update for the month ending August 31, 2017

The Dow Jones Industrial Average ended the month at 21,948.10, up from its July 31, 2017 close of 21,891.12.  The Dow is up over 11.3% year to date. The S&P 500 closed the month at 2,471.65, unchanged from its July close of 2,470.31. The S&P is up  10.5% year to date. The NASDAQ closed the month at 6,428.66, up from last month’s close of 6,348.12. It’s up 19.5% year to date. 

Treasury Bond yields drop in August – The 10-year Treasury bond closed on August 31, 2017 at 2.17%, down from 2.30% at the end of July.  The 30-year treasury yield ended the month at 2.73%, down from 2.89% last month.

Mortgage Rates remain near historic lows – The 30-year fixed mortgage rate remained under 4% in August. The August 31, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.82%, down from 3.93% on August 3, 2017. The 15-year fixed was 3.12%, down from last month’s close of 3.18%. The 5-year ARM was 3.14%, down slightly from 3.18% on August 3, 2017.

Existing home sales and prices higher in July than last July –Sales of existing homes in California totaled a seasonally annualized rate of 421,460 units in July, according to the California Association of Realtors. The number of sales of existing homes was down 4.9% from June’s sales pace. July’s sales pace was still 0.9% higher than last July. The statewide median price was $549,460, up 7.4% from July 2016.  There was a 3.2 month supply of homes for sale, up from 2.7 months in June, but down from 3.6 months in July 2016.

Fewer homes sold nationwide in July than June, yet still more than one year ago – The National Association of Realtors reported that total home sales slipped 1.3% in July from June’s sales pace level. Year-over-year the pace of home sales were still 2.1% higher than last July. Prices have continued to rise. The median price was 6.2% higher this July than July 2016. That marked the 65th straight month of year-over-year price increases. Inventory levels continued to shrink. The number of homes for sale nationwide was down 9% from one year ago. The unsold inventory nationwide represents a 4.2 month supply. That is down from a 4.8 month supply last July. Tight supply is causing prices to rise. Total existing home sales include all re-sale single family one to four unit homes, condominiums, co-ops, and town homes.

Home affordability slips in California as prices rise – The California Association of Realtors reported that  29% of California households could afford to buy a $559,260 median-priced home in the second quarter. That is down from 32% in the first quarter of 2017 and 31% one year ago in Q2 2016. The annual income required to purchase the median-priced home was $110,780. They found that 38% of California households were able to purchase a median-priced condominium or town-house, which was $443,400. The annual income required was $88,870.

We are waiting for job gain numbers which will be out next Friday. That’s a good indicator of where the economy is heading.

Have a great holiday weekend!

Syd

Stocks higher this week – Stocks rose this week after two previous weeks of declines. Stocks have performed strongly in the first two thirds of the year. Stock market indexes, while off the record highs hit just a few weeks ago, have logged double digit gains for the first time since 2013. The Dow Jones Industrial Average ended the week at 21,814.67, up from 21,674.51 last week. The S&P 500 closed the week at 2,443.05, up from its close last week of 2,426.55. The NASDAQ closed the week at 6,265.64, up from last week’s close of 6,216.53. 

Bond yields almost unchanged this week – Remaining near the lowest levels of the year – The 10-year Treasury bond closed the week at 2.17%, almost unchanged from 2.19% last week. The 30-year treasury yield ended the week at 2.75%, slightly down from 2.78% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates remain under 4% – The 30-year fixed rates are about the lowest they have been in almost a year. Short term rates have risen. The August 24, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.86%, down slightly from 3.89% last week. The 15-year fixed was 3.16%, down slightly from 3.17% last week. The 5-year ARM was 3.17%, up slightly from 3.16% last week. 

Fewer homes sold nationwide in July than June, yet still more than one year ago – The National Association of Realtors reported that total home sales slipped 1.3% in July from June’s sales pace level. Year-over-year the pace of home sales were still 2.1% higher than last July. Prices have continued to rise. The median price was 6.2% higher this July than July 2016. That marked the 65th straight month of year-over-year price increases. Inventory levels continued to shrink. The number of homes for sale nationwide was down 9% from one year ago. The unsold inventory nationwide represents a 4.2 month supply. That is down from a 4.8 month supply last July. Tight supply is causing prices to rise. Total existing home sales include all re-sale single family one-to-four unit homes, condominiums, co-ops, and town homes. 

Have a great weekend!
Syd

Stocks drop this week – This week the latest companies to report second quarter corporate earnings had disappointing results. Snap Inc., the owner of Snapchat saw a loss of nearly 20% after its quarter loss grew. That affected many stocks in the tech sector. JC Penny also had a disappointing quarter. It’s stock dropped to an all time low. This put pressure on retail stocks. Some analysts attributed the drop on geopolitical conditions due to rhetoric with North Korea. Year-to-date the Dow is up 10.6%, the S&P is up 9% and the NASDAQ is up 16.3%, so some profit taking is expected. The Dow Jones Industrial Average ended the week at 21,858.33, down from 22,092.82 last week. The S&P 500 closed the week at 2,441.33, down from its close last week of 2,476.83. The NASDAQ closed the week at 6,256.56, down from last week’s close of 6,351.56.

Bond yields drop this week – The 10-year Treasury bond closed the week at 2.19%, down from 2.27% last week. The 30-year treasury yield ended the week at 2.79%, down from 2.84% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates down slightly this week – The August 10, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.90%, down slightly from 3.93% last week. The 15-year fixed was 3.18%, down from 3.18% last week. The 5-year ARM was 3.14%, almost unchanged from 3.15% last week. Rates dropped late in the week. Next week’s survey rates should be even lower. 

Home affordability slips in California as prices rise – The California Association of Realtors reported that 29% of California households could afford to buy a $559,260 median-priced home in the second quarter. That is down from 32% in the first quarter of 2017 and 31% one year ago in Q2 2016. The annual income required to purchase the median-priced home was $110,780. They found that 38% of California households were able to purchase a median-priced condominium or town-house, which was $443,400. The annual income required was $88,870. 

Have a great weekend!
Syd

209,000 new jobs added in July – Figures released from The Department of Labor reported that U.S. employers added 209,000 new jobs in July. This beat analysts expectations of 183,000 jobs. Job growth, which slowed earlier in the year, rebounded in June and July with the economy adding about 440,000 new jobs in 60 days and about 1.1 million new jobs for the first 7 months of 2017. The unemployment rate dropped to 4.3%, its lowest level since March 2001, from 4.4% in June. Average hourly wages grew 2.5% from last July. 

GDP up in second quarter. The gross domestic product, which is the broadest measure of the economy, was up 2.6% in the second quarter of 2017. That was in line with expectations, but represented a rebound from just a 1.4% increase in the first quarter where it looked like the economy was slowing. While still below the growth of 3% the government is shooting for it was a positive sign for investors. 

Dow ends week at record high – Solid earnings has propelled stocks bringing all indexes at or near record highs. With about 75% of companies reporting, earnings are up 10.1% year over year, beating estimates of a 6.4% increase. Other news had a rebound in the GDP in the second quarter, higher consumer confidence, and positive news from Europe and Asia whose economies have strengthened. The Dow Jones Industrial Average ended the week at 22,092.82, up from 21,830.21 last week. The S&P 500 closed the week at 2,476.83, up from its close last week of 2,472.10. The NASDAQ closed the week at 6,351.56, down from last week’s close of 6,374.78. 

Bond yields drop slightly this week- The 10-year Treasury bond closed the week at 2.27%, down from 2.30% last week. The 30-year treasury yield ended the week at 2.84%, down from 2.89% last week. Mortgage rates follow treasury bond yields so we watch bond yields carefully.

Mortgage Rates remain low – The August 3, 2017 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.93%, unchanged from 3.92% last week. The 15-year fixed was 3.18%, down from 3.20% last week. The 5-year ARM was 3.15% down from 3.18% last week. 

Have a great weekend!
Syd