Economic update for the week ending October 5, 2019
September jobs report - Unemployment rate drops to a 50-year low - The Labor Department reported that 136,000 new jobs were added in September. While that was slightly lower than the 147,000 new jobs that analysts expected, the unemployment rate dropped to 3.5%, a 50 year low. Year to date U.S. employers have added an average of 161,000 new jobs a month over the first 9 months, down from a monthly average of 223,000 new jobs added in 2018. Wage growth moderated. Average hourly wages grew 2.9% year over year from last September, down from a 3.2% year over year increase in August. Stocks dropped for a third consecutive week - Stocks declined after a disappointing manufacturing report revealed that manufacturing activity dropped more than expected in September. That marked the second month in a row that manufacturing constricted as manufacturers have cut output on fears that tariffs will lower sales. A positive jobs report was released on Friday. News that the unemployment rate was at a 50-year low rallied the markets to make up much of the losses earlier in the week. Dow Jones Industrial Average closed the week at 26,573.73, down 0.9% from 26,820.25 last week. It is up 13.9% year to date. The S&P 500 closed the week at 2,952.79 down 0.3% from 2,961.79 last week. It is up 17.8% year to date. The NASDAQ closed the week at 7,982.47, up 0.5% from 7,936.63 last week. The NASDAQ is up 20.3% year to date. U.S. treasury bond yields lower for the week - The 10-year treasury bond closed the week yielding 1.52%, down from 1.69% last week. The 30-year treasury bond yield ended the week at 2.01%, down from 2.13% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates unchanged this week - The October 3, 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 3.65%, unchanged from 3.64% last week. The 15-year fixed was 3.14%, almost unchanged from 3.16% last week. The 5-year ARM was 3.38%, unchanged from 3.38% last week. Author, Syd Leibovitch
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Stocks lower for the week - Political upheaval dominated the headlines this week, but there was other economic news that impacted markets. A key consumer spending report revealed that consumer spending slowed in August. Inflation moderated in August falling well below the Fed’s 2% target. This relieves pressure on the Fed and allows them to continue dropping their key interest rate without the risk of inflation. The Consumer Confidence Index dropped in September, as consumers reported that they were growing nervous about the economy because of trade tensions. The Dow Jones Industrial Average closed the week at 26,820.25, down 0.4% from 26,935.07 last week. It’s up 15% year to date. The S&P 500 closed the week at 2,961.79, down 1.0% from 2,992.07 last week. It is up 18.1% year to date. The NASDAQ closed the week at 7,939.63, down 2.2% from 8,117.67 last week. The NASDAQ is up 19.7% year to date.
U.S. treasury bond yields lower for the week - The 10-year treasury bond closed the week yielding 1.69%, down from 1.74% last week. The 30-year treasury bond yield ended the week at 2.13%, down from 2.17% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates lower this week - The September 26, 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 3.64%, down from 3.73% last week. The 15-year fixed was 3.16%, down from 3.21% last week. The 5-year ARM was 3.38%, down from 3.49% last week. August California existing home sales report - The California Association of Realtors reported that existing single-family homes sales totaled 406,100 in August on a seasonally adjusted annualized rate. That represented a year over year increase of 1.6% from last August. The number of homes sold year to date is down 4.1% from the first 8 months of 2018. The statewide median price was $617,410, up 3.6% from last August. The unsold inventory index stood at a 3.2-month supply of homes for sale, down from a 3.3 month supply last August. Year over year results on a regional basis were as follows: In Los Angeles County the median price was $627,690, up 3.3% from last August. The number of sales was down 1.5% from last August. In Orange County the median price was $810,000, down 3.4% from August 2018. The number of sales increased 2.1% from August 2018. In Ventura County the median price was $661,900, up 0.3% from last August. The number of sales increased 1.4% from last August. Nationwide existing-home sales and prices increase in August- The National Association of Realtors reported that that the number of existing-home sales increased 2.6% in August from the number of sales last August. The nationwide median price paid for a home increased 4.7% in August from one year ago. That marked the 90th conservative month of year over year increases in the median price. Pending home sales also grew 1.6% in August, a signal that September existing-home sales figures will be strong. Near historic low mortgage interest rates increased home buyer confidence in third quarter - The National Association of Realtors reported that lower interest rates boosted consumer optimism in the real estate market. The survey completed September 23 revealed that 63% of consumers surveyed felt it was a good time to buy a home. Author, Syd Leibovitch Stock markets finished slightly lower this week - The Federal Reserve dropped the Federal Funds Rate one quarter of a percent this week. This followed a 1/4% drop at its last meeting in July. The rate is now at 1.75%-2%. Oil prices spiked following an attack on Saudi oil fields. The Dow Jones Industrial Average closed the week at 26,935.07, down 1% from 27,219.52 last week. It’s up 15.5% year to date. The S&P 500 closed the week at 2,992.07, down 0.5% from 3,007.39 last week. It is up 19.4% year to date. The NASDAQ closed the week at 8,117.67, down 0.7% from 8,176.71 last week. The NASDAQ is up 22.3% year to date.
U.S. treasury bond yields lower for the week - The 10-year treasury bond closed the week yielding 1.74%, down from 1.90% last week. The 30-year treasury bond yield ended the week at 2.17%, down from 2.37% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates higher this week - The September 19, 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 from 3.56% last week. The 15-year fixed was 3.21%, up from 3.06% last week. The 5-year ARM was 3.49%, up from 3.36% last week. August California existing home sales report - The California Association of Realtors reported that existing single-family homes sales totaled 406,100 in August on a seasonally adjusted annualized rate. That represented a year over year increase of 1.6% from last August. The number of homes sold year to date is down 4.1% from the first 8 months of 2018. The statewide median price was $617,410, up 3.6% from last August. The unsold inventory index stood at a 3.2-month supply of homes for sale, down from a 3.3 month supply last August. Year over year results on a regional basis were as follows: In Los Angeles County the median price was $627,690, up 3.3% from last August. The number of sales was down 1.5% from last August. In Orange County the median price was $810,000, down 3.4% from August 2018. The number of sales increased 2.1% from August 2018. In Ventura County the median price was $661,900, up 0.3% from last August. The number of sales increased 1.4% from last August. Author, Syd Leibovitch Stock markets up for third straight week - Investors are optimistic that a trade deal with China is close. Tensions eased after China announced that it was lifting tariffs on dozens of U.S. products. The Trump Administration responded by delaying an increase in tariffs that were to begin next month. It was feared that a trade war could push the country into a recession. Those recession fears have eased over the past three weeks as both countries have eased up the rhetoric and delayed, or removed some tariffs. This has pushed stocks up and markets are now near record highs. Unfortunately, treasury bond yields which had dropped to near record lows as a result of recession fears have moved sharply higher. Higher treasury bond yields have pushed up mortgage rates sharply. The Dow Jones Industrial Average closed the week at 27,219.52, up 1.6% from 26,797.46 last week. It’s up 16.7% year to date. The S&P 500 closed the week at 3007.39, up 1% from 2,978.81 last week. It is up 20% year to date. The NASDAQ closed the week at 8,176.71, up 0.9% from 8,103.07 last week. The NASDAQ is up 23.2% year to date.
U.S. treasury bond yields much higher - The 10-year treasury bond closed the week yielding 1.90%, up from 1.55% last week. The 30-year treasury bond yield ended the week at 2.37%, up from 2.02% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates higher this week - The September 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 3.56% up from 3.49% last week. The 15-year fixed was 3.06%, up from 3.00% last week. The 5-year ARM was 3.36%, up from 3.30% last week. Unfortunately, rates rose sharply on Thursday and Friday after the survey. Next week’s 30-year will be almost 4%. Housing numbers should be released next week for August home sales. Author, Syd Leibovitch 130,000 new jobs added in August - The Bureau of Labor Statistics reported that U.S. employers added 130,000 new jobs in August. That figure was below analysts expectations of 160,000. The unemployment rate held steady at 3.7%. Average hourly wages grew 3.2% from last August.
Stock markets higher this week - News that China and the U.S. scheduled trade negotiations in October in Washington helped stocks rally for a second straight week. The Dow Jones Industrial Average closed the week at 26,797.46, up 1.5% from 26,403.28 last week. It’s up 14.9% year to date. The S&P 500 closed the week at 2,978.71, up 1.8% from 2,926.46 last week. It is up 18.8% year to date. The NASDAQ closed the week at 8,103.07, up 1.8% from 7,962.88 last week. The NASDAQ is up 22.1% year to date. U.S. treasury bond yields slightly higher - The 10-year treasury bond closed the week yielding 1.55%, up from 1.50% last week. The 30-year treasury bond yield ended the week at 2.02%, up from 1.96% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates near record lows - The September 5, 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 3.49%, down from 3.58% last week. The 15-year fixed was 3.0%, down from 3.06% last week. The 5-year ARM was 3.30%, unchanged from 3.31% last week. Author, Syd Leibovitch Stocks finished the week sharply higher after four straight weeks of loses - Stocks markets climbed this week as both the US and China seemed to be backing down on further trade tariffs which have escalated into a trade war. Investors hope that both sides will back down and claim victory ending tensions which have harmed the economies in both countries. The Commerce Department announced this week that consumer spending was up 4.7% in the second quarter, its largest gain in four years. Consumer spending accounts for two thirds of the US economy, so this report helps to ease investors’ recession fears. The Dow Jones Industrial Average closed the week at 26,403.28, up 3% from 25,628.90 last week. It’s up 13.2% year to date. The S&P 500 closed the week at 2,926.46, up 2.8% from 2,847.11 last week. It is up 16.7% year to date. The NASDAQ closed the week at 7,962.88, up 2.7% from 7,751.27 last week. The NASDAQ is up 20% year to date.
10-year treasury bond yield dropped below 2% this week - The 10-year treasury bond closed the week yielding 1.50% down slightly from 1.52% last week. The 30-year treasury bond yield ended the week at 1.96%, down from 2.02% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates near record lows - The August 29, 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 3.58%, almost unchanged from 3.55% last week. The 15-year fixed was 3.06% almost unchanged from 3.03% last week. The 5-year ARM was 3.31% unchanged from 3.32% last week. Author, Syd Leibovitch Stocks lower for the fourth straight week - Stock markets were on track to finish higher this week, ending a three week slide until China initiated a new round of retaliatory tariffs and President Trump announced that he would do the same on Friday. Following the back and forth, stocks sustained heavy loses and ended the week down sharply. The Dow Jones Industrial Average closed the week at 25,628.90, down 1.0% from 25,886.01 last week. It’s up 9.9% year to date. The S&P 500 closed the week at 2,847.11, down 1.4% from 2,888.68 last week. It is up 13.6% year to date. The NASDAQ closed the week at 7,751.27, down 1.8% from 7,895.99 last week. The NASDAQ is up 16.8% year to date.
Treasury Bond Yields at lowest level in 3 years - Bond yields dropped sharply on recession fears - The 10-year treasury bond closed the week yielding 1.52%, down slightly from 1.55% last week. The 30-year treasury bond yield ended the week at 2.02%, unchanged from 2.01% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates near record lows - The August 22, 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 3.55%, downfrom 3.60% last week. The 15-year fixed was 3.03%, down slightly from 3.07% last week. The 5-year ARM was 3.32%, almost unchanged from 3.36% last week. July 2019 nationwide home sales report - Lower rates lead to more home sales and higher prices nationwide - The National Association of Realtors announced that the number of total existing home sales jumped 2.5% in July from the number of homes sold in June. Year over year the number of sales were up 0.6% from last July. Total existing home sales include re-sale single-family, condominiums, town-homes, and co-ops. The median price increased 4.3% from July 2018. That marked the 89-straight month on year over year increases in the median price. Inventory levels were slightly below one year ago. There was a 4.2 month supply of homes for sale in July, down from a 4.3 month supply last July. Author, Syd Leibovitch Stocks drop for the third straight week -Stocks declined as recession fears increased after several economic indicators point to a global slowdown. President Trump announced that tariffs scheduled to begin in September would be pushed back to at least the middle of December, which helped the markets in an otherwise turbulent week. The Dow Jones Industrial Average closed the week at 25,886.01, down 1.5% from 26,287.44 last week. It’s up 11% year to date. The S&P 500 closed the week at 2,888.68, down 1.0% from 2,918.655 last week. It is up 15.2% year to date. The NASDAQ closed the week at 7,895.99, down 0.8% from 7,959.14 last week. The NASDAQ is up 19% year to date.
Treasury Bond Yields at lowest level in 3 years - Bond yields dropped sharply on recession fears - The 10-year treasury bond closed the week yielding 1.55%, down from 1.74% last week. The 30-year treasury bond yield ended the week at 2.01%, down from 2.26% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates near record lows this week - The August 15, 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 3.60, unchanged from 3.60% last week. The 15-year fixed was 3.07%, almost unchanged from 3.05% last week. The 5-year ARM was 3.35%, unchanged from 3.36% last week. Rates dropped at the end of the week. The 30-year fixed was well under 3.5%! Next week’s survey rates should be lower. July California existing home sales report – July marked the first month in one year where the number of sales increased year over year for the same month the previous year - The California Association of Realtors reported that existing single-family homes sales totaled 411,630 in July on a seasonally adjusted annualized rate. That represented a jump of 5.6% from Juneand a year over year increase of 1.1% from last July. The number of homes sold from January to July are down 4.9% compared to the first 7 months of 2018, but it was encouraging to have a month with more sales than the same month last year. The statewide median price was $607,990, up 2.8% from July 2018. Theunsold inventory index stood at a 3.2-month supply of homes for sale, down from a 3.3 month supply last July. Year over year results on a regional basis in July were as follows: In Los Angeles Countythe median price was $611,250, up 2.3%, and the number of sales increased 4.7%. In Orange County the median price was $839,450, up 1.3%, and the number of sales increased 6.7%. In Ventura Countythe median price was $685,000, up 3.4%, and the number of sales increased 2.1%. Author, Syd Leibovitch Trade war worries dragged down stocks this week - Stocks fell modestly while bond yields dropped to a three year low as global markets reacted to an unexpected drop in China’s currency. As the trade war escalated, China retaliated by allowing its currency to drop to the lowest level in a decade. Cheaper currency makes Chinese goods less expensive for consumers in other countries, which basically offsets tariffs. Conversely, a weaker yen makes American and other imports more expensive to Chinese consumers. The Dow Jones Industrial Average closed the week at 26,287.44, down 0.7% from 26,485.01 last week. It’s up 12.7% year to date. The S&P 500 closed the week at 2,918.65, down 0.5% from 2,932.05 last week. It is up 17% year to date. The NASDAQ closed the week at 7,959.14, down 0.9% from 8,004.07 last week. The NASDAQ is up 20.0% year to date.
Treasury Bond Yields at lowest level in 3 years - Bond yields dropped sharply this week. The 10-year treasury bond closed the week yielding 1.74%, down from 1.86% last week. The 30-year treasury bond yield ended the week at 2.26%, down from 2.39% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates near record lows this week - The August 8, 2019 Freddie Mac Primary Mortgage Survey showed mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.60%, down from 3.75% last week. The 15-year fixed was 3.05%, down from 3.20% last week. The 5-year ARM was 3.36%, down from 3.46% last week. Home affordability drops in second quarter, but affordability is still higher than one year ago - The California Association of Realtors reported that 30% of California households could afford to purchase a $608,660 median-priced home in the second quarter of 2019. That was down from 32% in the first quarter, as the median price rose over 7% from the first to second quarter, but homes are more affordable than one year ago when only 26% of households could afford the median priced home in Q2 2018. The income needed to purchase a median priced home was $122,960. 45% of households could afford to purchase a median priced condominium or townhouse which required an annual income of $95,960. Author, Syd Leibovitch U.S. economy adds 164,000 new jobs in July - The Bureau of Labor Statistics reported that 164,000 new jobs were created in July. The unemployment rate held steady at 3.7%, which was just above a 50-year low set earlier in the year. Average hourly wages were up 3.2% from one year ago.
Fed Cuts interest rates for the first time since 2008 – Federal Reserve Chairman Jerome Powell announced that the fed had dropped its target rate by .25% to 2% on July 31. That rate cut, the first cut in over a decade signaled a change in policy by the Fed. Chairman Powell stated, “the U.S. economy was favorable, and this action is designed to support that outlook. The cut is intended to ensure against downside risks from weak global growth and trade tensions.” After the cut was announced stocks dropped, and bond and mortgage interest rates dropped. Stocks markets drop sharply following Fed rate cut – Stock markets recorded their worst week of the year following a rate cut by the Fed that many felt would be welcome news for investors. Unfortunately, the rate cut made investors worry that the economy was not in as good of shape as everyone thinks, and possibly the Fed knows something we don’t. Corporate earnings have also been mixed, as second quarter earnings are being released. Lastly, President Trump announced more sanctions on China and Russia this week which further scared investors. It’s important to note that this was just one of the few down weeks of the year. Stocks are just below record levels, and stock markets have risen year to date at record pace. The Dow Jones Industrial Average closed the week at 26,485.01, down 2.6% from 27,192.45 last week. It’s up 13.5% year to date. The S&P 500 closed the week at 2,932.05, down 3.1% from 3,025.86 last week. It is up 17% year to date. The NASDAQ closed the week at 8,004.07, down 3.9% from 8,330.21 last week. The NASDAQ is up 20.6% year to date. Treasury Bond Yields - Bond yields dropped sharply this week. The 10-year treasury bond closed the week yielding 1.86%, down sharply from 2.08% last week. The 30-year treasury bond yield ended the week at 2.39%, down from 2.59% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates lower this week - The August 1, 2019 Freddie Mac Primary Mortgage Survey showed mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.75%, unchanged from 3.75% last week. The 15-year fixed was 3.20%, up slightly from 3.18% last week. The 5-year ARM was 3.46%, almost unchanged from 3.47% last week. Rates dropped after the Fed rate cut. Next week’s rates will be lower. Author, Syd Leibovitch |
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