Rodeo Realty

Stocks flat for the week – The Dow Jones Industrial Average, S&P 500, and the NASDAQ reached all-time highs on Monday, before losing ground and ended the week almost unchanged. Oil strengthened which could help oil producing regions, and the dollar softened which could be good for exports if these trends continue. The Federal Reserve released its July meeting minutes on Wednesday, but there was little impact, as committee members gave no detail about when they plan to raise rates next. The committee left the door open for a September or December rate hike, but the minutes showed that members have mixed views on the employment and inflation trends, along with the impact Brexit will have, indicating that they will raise rates at a very slow pace. The Dow Jones Industrial Average closed the week at 18,552.57, down slightly from 18,576.47 last Friday. The S&P 500 closed the week at 2,183.87, almost unchanged from 2,184.05 last week. The NASDAQ closed the week at 5,238.38, almost unchanged from last week’s close of 5,232.90.

Bond yields slightly higher – The 10 year U.S. Treasury bond yield closed the week at 1.58%, up from 1.51% last Friday. The 30-year U.S. Treasury bond closed at 2.29%, up from 2.23% last week. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates remain near record lows – The Freddie Mac Primary Mortgage Survey released on August 18, 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 3.43%. The 15-year fixed average rate was 2.74%. The 5/1 ARM average rate was 2.76% 

California employers add 36,400 new jobs in July – The Employment Development Department reported that California’s employers added 36,400 new jobs in July. Although this was considered solid job gains by experts, the unemployment rate actually rose from 5.4% in June to 5.5% in July, as more workers entered the job search. 

Number of existing homes sold in July drops as tight inventory puts a squeeze on sales – The California Association of Realtors reported that the number of existing homes sold in California declined 4.1% from June’s sales pace and 5.1% from last July’s annualized rate as historically low inventory levels dragged down sales. The statewide median price in July was $509,830 which was down 1.8% from June and up 3.9% from July 2016. The unsold inventory index edged up from a 3.2 month supply in June to a 3.6 month supply in July.

Have a great weekend!
Syd

Stocks up slightly this week – The DOW, S&P, and NASDAQ hit record highs again on Thursday, as investors responded to higher oil prices, and strong second quarter earnings from several large retailers. With almost all companies in the S&P 500 reporting, 69% beat analysts’ earnings estimates. Unfortunately, Friday after a disappointing retail sales report, and a drop in the producer price index stocks dropped as investors digested that spending stalled in July, despite two months of very strong job growth. The Dow Jones Industrial Average closed the week at 18,576.47, up slightly from 18,543.53 last Friday. The S&P 500 closed the week at 2,184.05, up slightly from 2,182.87 last week. The NASDAQ closed the week at 5,232.90, up from last week’s close of 5,221.12.

Bond yields drop – Weak July retail sales data, and falling producer prices caused bond yields to drop. It is widely felt that with inflation below the Fed’s target rate, and spending softening the Fed will not be raising its key interest rates. The 10 year U.S. Treasury bond yield closed the week at 1.51%, down from 1.59% last Friday. The 30-year U.S. Treasury bond closed at 2.23%, down from 2.32% last week. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates remain near record lows – The Freddie Mac Primary Mortgage Survey released on August 11, 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 3.45%. The 15-year fixed average rate was 2.77%. The 5/1 ARM average rate was 2.74%. 

Retail sales unchanged from June – The Commerce Department reported that retail sales in July showed no increase over June’s figure which increased 0.8% from May. Still retail sales rose 2.3% from a year ago, but economists had expected sales to rise 0.4% in July. After two months of very strong job growth experts were not expecting spending to weaken. 

Producer Price Index takes unexpected drop – The Labor Department reported that the producer price index, a key measure of inflation dropped 0.4% last month. Year over year the index shows that producer prices have slipped 0.2% since last July. Fed officials have repeatedly expressed concern about low inflation, as a strong dollar and low oil prices have muted prices.

Employers add 255,000 new jobs in July – The Bureau of Labor Statistics reported that U.S. employers added 255,000 net new jobs in July. Expectations were in the 180,000 new jobs range. Job gains had stalled out in the beginning of the year, bottoming out in May when only 24,000 new jobs were created, the worst month since the recovery began. Jobs rebound in June with a revised figure of 292,000 new jobs, one of the best months ever, and now in July with 255,000 new jobs created. July marked 70 straight months of job gains. The only sector that lost jobs in July was oil and mining, as low oil prices have caused companies to cut production. The unemployment rate held steady at 4.9%. Hourly wages also ticked up slightly bringing wages up 2.6% from last July, up from 2.2% for the 12 months ending July 2015. Wages were increasing between 3% and 3.5% annually before the recession. 

Stocks rise following strong job gains – NASDAQ and S&P at all time highs – Stocks rose Friday following the announcement of an interest rate cut by The Bank of England and other measures to stimulate the economy in the United Kingdom, and a stronger than expected U.S. new jobs report that showed that employers added 255,000 new jobs in July. Stocks had slid throughout the week. Last Friday’s GDP announcement that the economy grew just 1.2% last quarter weighed on the market early in the week.investors also pulled back due to falling oil prices which slipped to $41 per barrel, after hitting $50 a barrel in June. Oil was $120 a barrel two years ago before beginning a steep slide, bottoming out at $28 a barrel in February. Oil prices had been on the rise until slipping over the past few weeks. The Dow Jones Industrial Average closed the week at 18,543.53, up from 18,432.24 last Friday. The S&P 500 closed the week at 2,182.87, an all time high, up from 2,173.60 last week. The NASDAQ closed the week at 5,221.12, also a record high, up from last week’s close of 5,162.13. 

Bond yields rise – Investors moved funds from bonds to stocks pushing rates up. The 10 year U.S. Treasury bond yield closed the week at 1.59%, up from 1.46% last Friday. The 30-year U.S. Treasury bond closed at 2.32%, up from 2.18% last week. Mortgage rates follow bond yields so we watch bond yields closely. Mortgage rates rose with bonds at the end of the week.

Mortgage rates – The Freddie Mac Primary Mortgage Survey released on August 4, 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 3.43%. The 15-year fixed average rate was 2.74%. The 5/1 ARM average rate was 2.73%. Rates were about 1/8% higher to end the week, so expect next week’s survey to reflect that.

Have a great weekend!

Syd

Second quarter GDP disappointing – The Commerce Department reported that U.S. economy expanded less than forecasted in the second quarter after a weaker start to the year than previously estimated as companies slimmed down inventories and remained wary of investing amid shaky global demand. Gross domestic product rose at a 1.2 percent annualized rate after a 0.8 percent advance in the first quarter. The median forecast of economists surveyed called for a 2.5 percent second-quarter increase. The report raises the risk to the outlook at a time Federal Reserve policy makers are looking for sustained improvement. While consumers were resilient last quarter, businesses were cautious, cutting back on investment and aggressively reducing stockpiles amid weak global markets, heightened uncertainty, and the lingering drag from a stronger dollar.

Stocks stable this week after 4 weeks of gains – Stocks ended the month higher even though the DOW was down for the week. The Dow was dragged down partly because Exxon Mobil Corp posted its biggest loss since 1999 and Chevron corp also posted a loss for the second quarter. They are both Dow stocks. Oil also fell back to $41 a barrel after hitting $50 a barrel at the end of June. The Dow Jones Industrial Average closed the week at 18,432.24, down from 18,570.85 last Friday, but up for the month from 17,929.99 on June 30. The S&P 500 closed the week at 2,173.60, unchanged from 2,175.03 last week. It was up from 2,098.86 on June 30. The NASDAQ closed the week at 5,162.13, up from last week’s close of 5,100.06, and up from 4,842.67 on June 30, 2016.

Bond yields down for the week and end the month pretty much unchanged – After rising last week yields held steady this week. The 10 year U.S. Treasury bond yield closed the week at 1.46%, down from 1.57% last Friday. It was 1.49% on June 30. The 30-year U.S. Treasury bond closed at 2.18%, down from 2.29% last week. The 30 year yield was 2.30% on June 30. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates – Mortgage rates still near historic lows. The Freddie Mac Primary Mortgage Survey released on July 28, 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 3.48%. The 15-year fixed average rate was 2.78%. The 5/1 ARM average rate was 2.78%.

U.S. existing home sales at highest pace since February 2007 – The National Association of Realtors reported that existing home sales which include single family homes, condominiums, town-homes, and co-ops climbed 1.1% in June from May to a seasonally adjusted annual rate of 5.57 million. That was 3% higher than the 5.41 million in June 2015. It marks the highest number of sales since February 2007. Boosted by a greater share of sales to first-time buyers not seen in nearly four years, existing-home sales maintained their upward trajectory in June and increased for the fourth consecutive month, according to the National Association of Realtors. Only the Northeast saw a decline in closings in June. Sales to investors fell to their lowest overall share since July 2009. June pending home sales, homes under contract, also rose slightly. 

California pending home sales post third straight year over year increase in June – The California Association of Realtors reported that pending existing home sales continued their upward momentum in June to post three straight months of annual increases. Statewide pending home sales rose in June on an annual basis, with the Pending Home Sales Index (PHSI)* increasing 3.2 percent in June 2016 from June 2015, based on signed contracts. With pending sales on a rising trend in the past couple of months, June’s increase should lead to higher closed transactions in July and August. Pending home sales in Southern California as a whole rose 3.2 percent from June 2015 and 1.3 percent from May 2016, thanks to year-over-year gains of 5.5 percent in Los Angeles County, 4.1 percent in San Bernardino County, and 1.3 percent in San Diego County. Orange County experienced a 6.0 percent decrease from the previous year. 

New home sales hit highest pace in 8 years – Commerce Department data showed that new home sales increased 3.5% in June to an annualized rate of 592,000 homes. Experts had forecast an annualized rate of 560,000 homes. Purchases of new U.S. single-family homes rose in June to the highest level in more than eight years, indicating a firm and resilient housing market. 

California adds 40,299 jobs in June, but the sate’s unemployment rate was higher – The Bureau of Labor Statistics reported that although the state added over 40,000 jobs in June, the unemployment rate rose 0.2% in June to 5.4%. California’s unemployment rate peaked at 12.2% in February 2010 and is now 6.8% lower that at the height of the recession. June’s unemployment rate of 5.4% was up from May’s post recession low of 5.2%. 

Have a great weekend!
Syd