Daily Rate Update: March 26th-30th

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March 29, 2018 – 

Tame inflation data is giving both Stocks and Bonds a boost this morning as the month and quarter come to an end. The Fed’s favorite inflation gauge, the annualized Core PCE, met expectations of 1.6% for February, just above the 1.5% recorded in January – yet still well below the Fed’s target range of 2%. The month-over-month Core PCE rose 0.2%, in line with estimates and just below the 0.3% recorded in January. If inflation continues to run low, the Fed will be hard pressed to keep raising the short-term Fed Funds Rate multiple times in 2018.

Consumer Sentiment surged to its highest level in 14 years in March due in part to a growing economy and strong labor market. The final Consumer Sentiment Index for March rose to 101.4, the highest number since January 2004. Looking ahead, consumers see higher interest rates with a slight slowdown in economic growth. Consumer sentiment measures the overall health of the economy as determined by consumer opinion.

Americans filing for first-time unemployment benefits fell to lows not seen in 45 years as the labor market continues to grow. Weekly Initial Jobless Claims fell by 12,000 in the latest week to 215,000. The four-week moving average of claims, which irons out seasonal abnormalities, fell 500 to 224,500. Weekly Initial Jobless Claims have now run below the 300,000 threshold for 158 straight weeks, which signals a strong labor market.

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March 28, 2018 –

Final Gross Domestic Product (GDP) in the fourth quarter of 2017 came in at 2.9%, down a bit down from 3.2% in the third quarter. This was up, however, from the 2.5% from the second estimate. Within the report it showed that consumer spending rose 4.0%, up from 2.2% in the third quarter, representing the highest rate since the fourth quarter of 2014. Consumer spending makes up nearly 70% of GDP and is a key component of economic growth.

The National Association of REALTORS® reports that Pending Home Sales in February jumped 3.1% from January but limited housing supply continues to be an obstacle for potential home buyers. The 3.1% was above the 2.5% expected. From February of 2017 to February of 2018, sales were down 4.1%. Lawrence Yun, NAR chief economist, says “The expanding economy and healthy job market are generating sizeable homebuyer demand, but the minuscule number of listings on the market and its adverse effect on affordability are squeezing buyers and suppressing overall activity.”

The National Association of REALTORS® released its first quarter 2018 Housing Opportunities and Market Experience (HOME) survey this week showing that consumers felt more confident about the U.S. economy and their financial situations. Heading into the spring buying season, those surveyed on the question that now is a good time to purchase a home is at its lowest level in two years at 68% in the first quarter of 2018 from 72% in the final quarter of 2017.

Courtesy of Mortgage Market Guide

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March 27, 2018 – 

Home prices continued to rise in January due in part to the low amount of homes for sale on the markets. Currently there is a 3.4-month supply of homes for sale, well below the 6-month supply that is seen in a healthy market. The S&P/Case-Shiller 20-City Home Price Index rose 6.4% from January 2017 to January 2018, just above the 6.3% expected and up from 6.3% recorded from December 2016 to December 2017.

On a monthly basis, home prices were up 0.8% from December 2017 to January 2018. Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices David M. Blitzer says, “Despite limited supplies, rising prices and higher mortgage rates, affordability is not a concern. Affordability measures published by the National Association of REALTORS® show that a family with a median income could comfortably afford a mortgage for a median-priced home.”

Easing trade war fears between the U.S. and China and word that Kim Jong-un made a surprise visit to China are helping to lift U.S. Stocks today. Treasury Secretary Mnuchin is trying to strike a deal with his China counterpart that would lower tariffs on U.S. cars being imported into China and for China to open its market to U.S. financial services. This process of negotiations could take some time and the headlines will continue to impact the markets. This would be a major positive development if it comes to pass.

Courtesy of Mortgage Market Guide

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March 26, 2018 – 

Reports from the Wall Street Journal stating that the U.S. and China are in quiet trade talks are helping Stocks rebound after last week’s steep losses. The S&P 500 lost 6% last week, its worst week in two years, but finished just above support at its 200-day Moving Average at 2,585 on Friday. The Dow Jones Industrial Average was up 450 points in early Monday trading. All U.S. financial markets are closed Friday in observance of Good Friday.

Gas prices at the pumps continue to edge higher as the spring and summer driving seasons get underway. The national average price for a regular gallon of gasoline rose to $2.61 today, up $0.10 in the past month and up from $2.28 a year ago. Gas prices tend to move up in the spring and summer months as demand picks up and as refineries have more man hours around the clock to meet the increased demand.

Rental apartment prices have risen at their fastest pace over the past year according to Zillow. The median rent across the nation rose 2.8% in the past year to $1,445. In 2017, renters spent a record $485.6 billion, an increase of nearly $5 billion form 2016. Zillow says that the increase in rents is likely due to people renting longer than usual, which drives up demand and in turn, prices.

Courtesy of Mortgage Market Guide

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