Daily Rate Update: March 12th-16th

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March 16, 2018 – 

The Commerce Department reported that February Housing Starts declined by 7% from January to an annual rate of 1.236 million units, versus the 1.283 million expected and down from the 1.329 million reported in January. The big drag on starts was a 28% plunge in multi-family units from January to February, down 19.1% year over year. Single-family starts, which account for the biggest share of the housing market, rose 2.9% from January and also increased 2.9% year over year. Total Housing Starts fell in the Northeast, South and West with gains seen in the Midwest.

Consumers were positive on the U.S. economy in early March along with a favorable outlook on personal finances. The preliminary March Consumer Sentiment Index hit 102.0 this month, the highest reading since 2004. Consumers saw the recent tax cuts as favorable, which somewhat offset the tariff headlines out of Washington, D.C. In addition, consumer expectations of near-term inflation expectations rose to the highest level in a few years.
Job openings around the country rose to their highest levels on record as the labor market continues to grow. The Labor Department reported that its JOLTS (Job Openings and Labor Turnover Survey) showed that there were 6.3 million job openings in January with the openings concentrated in white-collar professional jobs. Last week the Unemployment Rate remained at a 17-year low of 4.1%.

Courtesy of Mortgage Market Guide

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March 15, 2018 –

Economic data had little impact on the U.S. markets earlier this morning with a better-than-expected Empire Manufacturing Index, Philadelphia Fed Index was in line with estimates and Weekly Initial Jobless Claims hovering near lows seen in 1970. The NAHB Housing Market Index came in at 70 this month, below the 72 expected and down from 71 in February. A reading above 50 is considered positive.

Homeowner equity got a big boost in 2017 rising by $908B due to the continued rise in home prices, reports CoreLogic. ATTOM Data Solutions reports that total residential mortgage originations in Q4 2017 came in at 1.9 million, down 20% from Q3 and down 19% from Q4 2016, due in part to a big decline in refinance originations.

After rising every week since 2018 began, mortgage rates edged lower this week as the tariffs and possible trade wars pushed Bond prices higher. Freddie mac reports that the 30-year fixed-rate mortgage fell two basis points to 4.44% with an average point of 0.5. Freddie Mac says average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.

Courtesy of Mortgage Market Guide

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March 14, 2018 – 

Spending at U.S. retail stores fell for the third straight month in February, which could signal an economic slowdown in the first quarter. February Retail Sales fell 0.1% last month versus the gain of 0.3% expected after declines in December and January. The three straight months of decline in Retail Sales has not occurred since April 2012. In order to have a healthy economy, the consumer has to spend. Consumer spending makes up two-thirds of the U.S. economy.

Mortgage rates continued to edge higher in the latest week hitting highs not seen since the beginning of 2014. The Mortgage Bankers Association reports that the 30-year fixed-rate mortgage rose four basis points in the latest week to 4.69%. That rate does carry an average point of 0.45 added on top. Interest rates in general have been moving higher since January 1 due in part to an improving economy.

With “March Madness” set to explode at the end of the week and continue on until April 2, worker productivity across the nation is expected to decline. Many companies will be hosting their NCAA brackets for March Madness with billions exchanging hands at offices around the country. In 2017, there were 70 million tournament brackets amounting to a whopping $10.4 billion wagered. The downside is a loss in worker productivity. It is estimated that unproductive work due to March Madness totaled $6.3 billion in 2017 and is ranked third in office distractions.

Courtesy of Mortgage Market Guide

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March 13, 2018 – 

The February Consumer Price Index (CPI) came in at 0.2% last month, in line with estimates and down from the 0.5% previously recorded in January. Lower energy prices were the catalysts for the lower readings. When stripping out volatile food and energy, the more closely watched Core CPI was also in line at 0.2%, leaving the year-over-year Core unchanged at 1.8%. If inflation numbers remain tame, the Fed will be hard pressed to raise the short-term Fed Funds Rate four times in 2018. This doesn’t change next week, as it appears a Fed Funds Rate hike is a lock at the FOMC meeting.

Small business optimism continued to run near record highs in February due in part to lower taxes and decreased regulations. The National Federation of Independent Business Small Business Optimism Index rose to 107.6 last month as owners showed unprecedented confidence in the economy. “When small business owners have confidence and certainty in the economy, they’re able to hire more workers and invest in their business,” said NFIB President and CEO Juanita Duggan.

The shakeups at the White House continued today as Secretary of State Rex Tillerson is out with current CIA Director Mike Pompeo taking his place. Last week President Trump’s Chief Economic Adviser, Gary Cohn resigned with the leading candidate being economist Larry Kudlow from CNBC. It’s been said that Mr. Tillerson failed to wield any significant influence in internal administration over issues surrounding North Korea and Russia.

Courtesy of Mortgage Market Guide

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March 12, 2018 – 

The Conference Board’s Employment Trends Index (ETI) +1.2% to 107.7, a fresh all-time high. “The Employment Trends Index accelerated further in February, suggesting that strong job growth is likely to continue in the coming months,” said Gad Levanon, Chief Economist, North America, at The Conference Board. February’s increase in the ETI was fueled by positive contributions from six out of the eight components.

There are no economic reports set for release today but the rest of the week is packed with reports on Retail Sales, the Consumer and Producer Price Indexes (inflation data), Consumer Sentiment, manufacturing and housing. The Fed will be closely watching tomorrow’s Consumer Price Index data for any signs of inflation when considering monetary policy at next week’s two-day Fed meeting. It is anticipated that the Fed will raise the short-term Fed Funds Rate by 0.25% at the meeting.

The personal savings rate in the United States rebounded to 3.2% in January 2018, up from a near historic low of 2.4% in December 2017. The monthly statistic, tracked since 1959, reached an all-time high of 17.0% in May 1975 and fell to a record low of just 1.9% in July 2005.

Courtesy of Mortgage Market Guide

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