U.S. Economy slowed in second quarter - The Commerce Department reported that the Gross Domestic Product, the broadest measure of goods and services produced, rose at a 2.1% annual rate in the second quarter. That was down significantly from 3.1% in the first quarter, but above some analysts expectations who forecasted that tariffs and trade concerns may drag the GDP to as low as a 1.8% annual increase in Q2. Investors who are awaiting a possible rate cut from the Federal Reserve actually pushed up stock prices, as this report increases the likelihood of a rate cut to stimulate the economy.
Stocks higher this week - Although the second quarter GDP dropped a full percentage point to a 2.1% annual growth rate in the second quarter, down from a 3.1% growth rate in the first quarter, stocks gained ground. That was because investors feel slower growth increases the likelihood of a rate cut by the Fed, which will reduce borrowing costs to companies. Companies reporting corporate earnings have been strong in early reporting. Consumer spending also increased 4.3% in the second quarter which is very strong. The Dow Jones Industrial Average closed the week at 27,192.45, up 0.1% from 27,154.20 last week. It’s up 16.4% year to date. The S&P 500 closed the week at 3,025.86, up 1.7% from 2,976.61 last week. It is up 20.7% year to date. The NASDAQ closed the week at 8,33.21, up 2.3% from 8,146.49 last week. The NASDAQ is up 25.5% year to date. Treasury Bond Yields - Bond yields dropped this week. The 10-year treasury bond closed the week yielding 2.08%, almost unchanged from 2.05% last week. The 30-year treasury bond yield ended the week at 2.59%, unchanged from 2.57% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates lower this week - The July 25, 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%, down from 3.81% last week. The 15-year fixed was 3.18%, down from 3.23% last week. The 5-year ARM was 3.47%, almost unchanged from 3.48% last week. U.S. existing home sales numbers decline in June, as prices continue to rise - The National Association of Realtors reported that total existing home sales which includes closed sales of single family homes, condominiums, townhomes, and co-opsdropped 1.7% month over month in June from May, to a seasonally adjusted annual rate of 5.27 million sales in June. That is down 2.2% from 5.39 million annual sales rate last June. The median price paid for a home was 4.3% higher than one year ago. That marked the 88th straight month of year over year increases in the median price. The unsold inventory index stood at a 4.4 month supply of homes for sale, up slightly from a 4.3 month supply one year ago. Author, Syd Leibovitch
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Stock markets ended the week lower - Investors took profits as stocks dropped from last week’s record high levels. Analysts have mixed expectations as they await the start of second quarter earnings results. Those should drive the markets in the coming weeks. The Dow Jones Industrial Average closed the week at 27,154.20, down 0.7% from 27,332.03 last week. It’s up 16.4% year to date. The S&P 500 closed the week at 2,976.61, down 1.2% from 3,013.77 last week. It is up 18.7% year to date. The NASDAQ closed the week at 8,146.49, down 1.2% from 8,244.17 last week. The NASDAQ is up 22.8% year to date.
Treasury Bond Yields - Bond yields dropped this week. The 10-year treasury bond closed the week yielding 2.05%, down from 2.12% last week. The 30-year treasury bond yield ended the week at 2.57%, down from 2.64% last week. We watch treasury bond yields because mortgage rates often follow bond yields. Mortgage rates slightly higher this week - The July 18, 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 3.81%, up slightly from 3.75% last week. The 15-year fixed was 3.23%, unchanged from 3.22% last week. The 5-year ARM was 3.48%, almost unchanged from 3.46% last week. June California existing home sales report - The California Association of Realtors reported that existing single family homes sales totaled 389,690 on a seasonally adjusted annualized rate in June. That represented a drop of 4.2% from May and a year over year drop of 5.1% from last June. The statewide median price was $611,420, up 1.4% from June 2018. The unsold inventory index stood at a 3.4 month supply of homes for sale in June, up from a 3.2 month supply in May and a 3.0 months supply one year ago. Year over year results on a regional basis in June were as follows: In Los Angeles County the median price increased 2.2%, as the number of sales fell 12.6%. In Orange County the median price increased .8% as the number of sales fell 7.2%. In Ventura County the median price dropped 4.1%, as the number of sales increased 0.6%. Foreign investment in U.S. residential real estate declined in the year ending March 31,2019. The National Association of Realtors reported that foreign buyers purchased $77.9 billion worth of existing homes from April 2018 to March 2019. That represented a 36% decline from $121 billion from the same time period one year earlier. NAR President, John Smaby stated “Even though the numbers were lower this year than the previous 12 months, international investors and buyers still spent and invested a great deal of money in U.S. real estate.” Foreign buyers also accounted for more cash transactions. All cash transactions accounted for 41% when purchased by a foreign buyer, compared to 21% for all existing home sales within the one year time period. Author, Syd Leibovitch The Dow exceeds 27,000 for the first time ever - This week Federal Reserve Chairman Powell’s testified before Congress. He signaled that an argument could be made for an interest rate cut. This led investors to speculate that a cut was likely in the coming months. The Fed controls overnight rates. Those directly affect prime lending rates. Cuts in these short term rates reduce interest expense to companies and push up corporate earnings. Speculation of a rate cut pushed all indexes up to record highs. Unfortunately, speculation of lower short term rates actually caused mortgage rates to rise this week. Mortgage rates are long term rates. Lower short term rates increase the risk of long term inflation and drives long term rates higher. The Dow Jones Industrial Average closed the week at 27,332.03, up 1.5% from 26,922.12 last week. It’s up 17.2% year to date. The S&P 500 closed the week at 3,013.77, up 0.8% from 2,990.41 last week. It is up 20.2% year to date. The NASDAQ closed the week at 8,244.17, up 1.0% from 8,161.79 last week. The NASDAQ is up 24.2% year to date.
Treasury Bond Yields - The 10-year treasury bond closed the month yielding 2.12%, up from 2.04% last week. The 30-year treasury bond yield ended the week at 2.64%, up from 2.54% last week. Mortgage rates remain at 2 year lows - The July 3, 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%, almost unchanged from 3.75% last week. The 15-year fixed was 3.22%, up from 3.18% last week. The 5-year ARM was 3.46%, unchanged from 3.45% last week. Rates ended the week higher. They will be about 1/8% higher next week. Homes purchased by investors were the highest on record in 2018 - The share of investor purchases of U.S. homes have climbed to an all-time high, a sign that rising home prices have done little to dampen demand for flipping homes or turning them into single-family rentals. Data released by CoreLogic reported that more than 11% of residential properties were purchased by real estate speculators, private equity firms, and other investors in 2018. Investor purchases are the highest on record and nearly twice the levels before the 2008 housing crash. The investor interest poses a challenge for millennials and other first-time buyers who are increasingly looking to buy starter homes and are forced to compete with deep-pocketed cash buyers. June home sales figures should be released next week. Those will be included in next week’s report. Based on our company sales we expect both the number of sales and prices to be higher. Author, Syd Leibovitch U.S. economy adds 224,000 new jobs in June - The Bureau of Labor Statistics reported that 224,000 new jobs were created in June. That eclipsed analysts’ expectations of 162,000 new jobs. It marked a dramatic rebound from the disappointing 75,000 new jobs added in May. The unemployment rate inched up to 3.7% from 3.6% in May which was a 50 year low. The report also showed that 335,000 people entered the labor force in June which marked a substantial increase, as workers are feeling more positive about their job and wage prospects. This accounted for the slight increase in the unemployment rate. Average hourly wages were up 3.1% from one year ago.
Stock markets finis week near all time highs - Stocks finished the week close to record high levels as investors feel trade talks will resume with China, and interest rates hover near 2 year lows. Friday’s strong jobs report was considered a mixed bag to investors. While certainly a strong report, the flip side is that it gives The Fed a strong argument not to lower its benchmark rates. The Fed floated the possibility of a rate drop in May. Since then stocks have finished higher in 4 out of the last 5 weeks, and major indexes have gained over 8%. The Dow Jones Industrial Average closed the week at 26,922.12, up 1.2% from 26,599.96 last week. It’s up 15.4% year to date. The S&P 500 closed the week at 2,990.41, up 1.7% from 2,941.76 last week. It is up 19.3% year to date. The NASDAQ closed the week at 8,161.79, up 1.9% from 8,006.24 last week. The NASDAQ is up 23.0% year to date. Treasury Bond Yields - The 10-year treasury bond closed the month yielding 2.04%, almost unchanged from 2.00% last week. The 30-year treasury bond yield ended the week at 2.54%, unchanged from 2.52% last week. Mortgage rates remain at 2 year lows - The July 3, 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%, almost unchanged from 3.73% last week. The 15-year fixed was 3.18%, unchanged from 3.16% last week. The 5-year ARM was 3.45%, up slightly from 3.39% last week. Author, Syd Leibovitch Stocks finish higher in a robust June - Stocks dropped slightly this week, their only weekly loss in the month of June. This week a drop in consumer confidence caused stocks to drop slightly, but drove interest rates down. Investors are also watching the start of the G20 Summit in Japan hoping for the U.S. and China to resume trade talks and reduce tariffs. The Dow Jones Industrial Average closed the week at 26,599.96, down 0.4% from 26,719.13 last week. It’s up 14.0% year to date. The S&P 500 closed the week at 2,94mj1.76, down 0.3% from 2,950.46 last week. It is up 17.3% year to date. The NASDAQ closed the week at 8,006.24, down 0.3% from 8,031.71 last week. The NASDAQ is up 20.7% year to date.
Treasury Bond Yields at lowest rate since 2017 - The 10-year treasury bond closed the week yielding 2.00%, down from 2.07% last week. The 30-year treasury bond yield ended the week at 2.52%, down from 2.59% last week. We watch treasury bond yields because mortgage rates follow bond yield yields. Mortgage rates continue to drop - The June 27, 2019 Freddie Mac Primary Mortgage Survey 30-year fixed mortgage rate average was 3.73%, down from 3.84% last week. The 15-year fixed was 3.16%, down from 3.25% last week. The 5-year ARM was 3.39%, down from 3.48% last week. Lower mortgage interest rates lifted Nationwide home sales in May - The National Association of Realtors reported that the number of homes sold jumped 2.5% month over month in May from April’s resale home numbers. Year over year sales were down 1.1%. The median price paid for a home in the U.S. was up 4.8% from last May, the 87th straight month of year over year increases in the median price. The unsold inventory index stood at a 4.3 month supply of homes for sale. That was just slightly higher than a 4.2 month supply last May. Pending sales also increased 1.1% in May from the number of homes that went under contract in April. Author, Syd Leibovitch Stock markets close week at or near record highs - The DOW and S&P hit new highs this week -Stocks finished higher for the third straight week. Investors were optimistic on hopes of lower interest rates as the Federal Reserve signaled that a rate cut this year was being considered. Other central banks overseas have also either dropped rates, or signaled that they were considering easing, forcing global bond yields down. The Dow Jones Industrial Average closed the week at 26,719.13, up 2.4% from 26,089.61 last week. It’s up 14.5% year to date. The S&P 500 closed the week at 2,950.46, up 2.2% from 2,881.98 last week. It is up 17.1% year to date. The NASDAQ closed the week at 8,031.71, up 3% from 7,796.66 last week. The NASDAQ is up 21% year to date.
Treasury Bond Yields hold at 24 month low - The 10-year treasury bond closed the week yielding 2.07%, almost unchanged from 2.09% last week. The 30-year treasury bond yield ended the week at 2.59%, unchanged from 2.59% last week. We watch treasury bond yields because mortgage rates follow bond yield yields. Mortgage rates remain at lowest levels in 2 years - The June 13, 2019 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.84%, almost unchanged from 3.82% last week. The 15-year fixed was 3.25%, almost unchanged from 3.26% last week. The 5-year ARM was 3.48%, down slightly from 3.51% last week. Lower mortgage rates spur more California home sales and higher home prices in May - The California Association of Realtors reported that the number of existing home sales in May totaled 406,960 on a seasonally adjusted annualized basis in May. It was the first time sales were above the 400,000 benchmark in almost a year. The statewide median price increased to $611,190, up 1.7% from last May, and a new record high. The unsold inventory index showed a 3.2 month supply of homes for sale, up from a 3 month supply one year ago. U.S. existing home sales rebound in May - The National Association of Realtors reported that the number of existing homes sold increased 2.5% month over month in May. The nation-wide median price increased 4.8% year over year from last May. That marked the 87th straight month of year over increases in the median price. Inventory levels showed a 4.3 month supply of homes for sale, up slightly from a 4.2 month supply one year ago. Author, Syd Leibovitch Stocks up for the week - High profile mergers and a strong May retail sales report lifted stocks this week. The Dow Jones Industrial Average closed the week at 26,089.61, up 0.4% from 25,983.94 last week. It’s up 11.8% year to date. The S&P 500 closed the week at 2,886.98, up 0.5% from 2,873.34 last week. It is up 15.2% year to date. The NASDAQ closed the week at 7,796.66, up 0.7% from 7,742.10 last week. The NASDAQ is up 17.5% year to date.
Treasury Bond Yields hold at 24 month low - The 10-year treasury bond closed the week yielding 2.09%, unchanged from 2.09% last week. The 30-year treasury bond yield ended the week at 2.59%, almost unchanged from 2.57% last week. We watch treasury bond yields because mortgage rates follow bond yield yields. Mortgage rates remain at lowest levels in 2 years - The June 13, 2019 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.82%, unchanged from 3.82% last week. The 15-year fixed was 3.26%, almost unchanged from 3.28% last week. The 5-year ARM was 3.51%, also almost unchanged from 3.52% last week. Housing sales and price data for May will be released next week. We are expecting both prices and sales numbers figures to be higher. Author, Syd Leibovitch Fewer new jobs were created in May - Unemployment remains at 50 year low - The Bureau of Labor Statistics reported that 75,000 new jobs were created in May. That was well below analysts’ expectations of 175,000 new jobs. The unemployment rate held steady at 3.6%, a 50 year low. Average hourly wages were up 3.1% from one year ago.
Stocks open June with best weekly gain in six months - This week negative news had positive results. Stocks had their worst May since 2010 after a trade deal with China collapsed, and President Trump announced last Friday that he would place tariffs on Mexico beginning June 10. Stocks dropped because investors felt that trade wars would slow the economy. This week news spread that investors felt that the Federal Reserve was considering dropping rates in order to offset any slowing caused by tariffs, and stocks rallied. On Friday a disappointing jobs report was actually followed by a jump in stock prices, as it is believed that a slowdown in job creation puts even more pressure on the Fed to drop rates. On a positive note, President Trump announced Friday that he was suspending indefinitely the tariffs on Mexico that he announced just last Friday. They were to begin Monday. The Dow Jones Industrial Average closed the week at 25,983.94, up 4.7% from 24,815.04 last week. It’s up 11.4% year to date. The S&P 500 closed the week at 2,873.34, up 4.4% from 2,752.06 last week. It is up 14.6% year to date. The NASDAQ closed the week at 7,742.10, up 3.9% from 7,453.15 last week. The NASDAQ is up 16.7% year to date. Treasury Bond Yields at lowest levels in 24 months - The 10-year treasury bond closed the week yielding 2.09%, down from 2.14% last week. The 30-year treasury bond yield ended the week at 2.57%, unchanged from 2.58% last week. We watch treasury bond yields because mortgage rates follow bond yield yields. Mortgage rates dropped to lowest levels in almost 2 years - The June 6, 2019 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.82%, down from 3.99% last week. The 15-year fixed was 3.28%, down from 3.46% last week. The 5-year ARM was 3.52%, down from 3.60% last week. Author, Syd Leibovitch Stock markets dropped for fourth straight week on trade war fears - Stocks dropped sharply this week as increased trade tensions with China led to a fourth straight week of losses. To make investors more depressed President Trump announced that he would take emergency powers and place a 5% tariff on all goods from Mexico beginning June 10, which will increase over time to 25% unless Mexico does something to stem illegal immigration. That announcement which caused another steep decline on Friday. All in all the DOW and S&P 500 declined 7%, and the NASDAQ declined 8% in May, its worst May since 2010. The Dow Jones Industrial Average closed the week at 24,815.04 down 3.0% from 25,585.69 last week, and down 7% from 26,554.39 on April 30. It’s up 6.4% year to date. The S&P 500 closed the week at 2,752.06, down 2.6% from 2,826.06 last week, and down 7% from 2,943.03 on April 30. It is up 9.8% year to date. The NASDAQ closed the week at 7,453.15, down 2.4% from 7,637.01 last week, and down 8% from 8,161.85 on April 30. The NASDAQ is up 12.3% year to date.
Treasury Bond Yields at lowest levels in 21 months - Trade and tariff fears caused investors to sell off stocks and move to the safety of low yielding treasury bonds, which has driven yields down to 18 month lows. The 10-year treasury bond closed the week yielding 2.14%, down from 2.32% last week. The 30-year treasury bond yield ended the week at 2.58% down from 2.75% last week. We watch treasury bond yields because mortgage rates follow bond yield yields. Mortgage rates dropped to 18 month lows this week - The May 30, 2019 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 3.99%, down from 4.06% last week. The 15-year fixed was 3.46%, down from 3.51% last week. The 5-year ARM was 3.60%, down from 3.66% last week. Rates were even lower on Friday. Expect next weeks survey rates to be close to 3.80% on a 30 year fixed! U.S. pending home sales fall slightly for the 16th straight month in April - Although really just a slight drop, the number of pending existing homes sold have declined on a year over year basis for 16 straight months, according to data released Thursday by The National Association of Realtors. They reported that pending existing home sales in April dropped 1.5% month over month from March, and dropped 2% year over year from last April. Existing home sales are calculated by the number of existing homes that went under contract and were reported to MLS and Realtor Associations throughout the country. Existing sales include re-sale single family homes, town-homes, condominiums, and co-ops. Following the announcement NAR Chief Economist stated that “it’s inevitable that sales turn higher in a few months.” He cited increased demand, a strong economy, and far lower interest rates than we have seen over the last 16 months to support his optimistic view. Author, Syd Leibovitch Economic update for the week ending May 25, 2019
Reports of a breakdown in trade talks with China caused stocks to drop again this week. Stock markets reached all time highs just three weeks ago, as investors felt a trade deal with China was close. Unfortunately, stocks have dropped sharply over the last three weeks as it appears that the proposed deal has fallen through. The U.S. and China have increased tariffs in recent weeks, and ratcheted up threats of future increases. Investors fear that these increased tariffs will slow economic growth. The Dow Jones Industrial Average closed the week at 25,585.69, down 0.7% from 25,764.00 last week. It’s up 9.7% year to date. The S&P 500 closed the week at 2,826.06, down 1.2% from 2,859.93 last week. It is up 12.7% year to date. The NASDAQ closed the week at7,637.01, down 2.3%, from 7,816.28 last week. The NASDAQ is up 15.1% year to date. 10 and 30 year Treasury Bond Yields at lowest levels since 2017 - The 10-year treasury bond closed the week yielding 2.32%, down from 2.39% last week. The 30-year treasury bond yield ended the week at 2.75%, down from 2.82% last week. We watch treasury bond yields because mortgage rates follow bond yield yields. Mortgage rates almost unchanged this week - The May 23, 2019 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.06%, down slightly from 4.07% last week. The 15-year fixed was 3.51%, down slightly from 3.54% last week. The 5-year ARM was 3.68%, slightly higher from 3.66% last week. U.S. home prices increase for the 86th consecutive month in April - The National Association of Realtors reported that the median price paid for an existing single family home increased 3.6% in April from April 2018. That marked the 86th consecutive month of year over year increases in the median price. The number of sales dropped 4.4% in April from the number of sales last April. Inventory levels increased 1.7% from one year ago. The unsold inventory index increased to a 4.2 month supply of housing for sale, from a 4 month supply one year ago. Author, Syd Leibovitch |
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