Economic update for the week ending December 14, 2019
Stock markets rise on trade deal - A limited trade agreement was announced this week between The U.S. and China. This deal calls for halting the trade war. President Trump stated that with this “phase one” agreement new tariffs that were set to take effect Sunday will not be enacted, and tariffs placed on some Chinese goods in September will be cut from 15% to 7.5%. China will reduce tariffs on some U.S. goods. They also agreed to increasing purchases on U.S. agricultural goods. This was just one week after President Trump said he was in no rush to make a deal which caused stocks to fall last week. News of an impending deal began to leak out early in the week and an announcement was made Friday that a limited trade deal had been struck. Once again markets closed the week at new record highs. The Dow Jones Industrial Average closed the week at 28,135.28 up 0.4% from 28,015.16 last week. It is up 20.6% year to date. The S&P 500 closed the week at 3,168.80, up 0.7% from 3,145.91 last week. It is up 26.4% year to date. The NASDAQ closed the week at 8,734.88, up 0.9%, from 8,656.53 last week. The NASDAQ is up 31.6% year to date.
U.S. treasury bond yields - The 10-year treasury bond closed the week yielding 1.82%, almost unchanged from 1.84% last week. The 30-year treasury bond yield ended the week at 2.26%, down slightly from 2.29% last week. We watch treasury bond yields because mortgage rates often follow bond yields.
Mortgage rates slightly higher this week - The December 12, 2019 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.73%, up slightly from 3.68% last week. The 15-year fixed was 3.19%, up slightly from 3.14% last week. The 5-year ARM was 3.36%, almost unchanged from 3.39% last week.
Home sales data should be released next week. November home sales will be included in next weeks update.