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Wednesday - July 26  

The Commerce Department reported on Tuesday that New Home Sales in June rose a modest 0.8% from May to an annual rate of 610,000 units, which was in line with estimates. From June 2016 to June 2017, sales rose 9.1%. The median sales price of new houses sold in June 2017 was $310,800. At June’s sales pace, there is a 5.4 months’ supply of homes for sales on the market, up 1.1% from May, though still below the 6 percent that is seen as normal.

The Federal Open Market Committee meeting will end this afternoon with the 2:00 p.m. ET release of its monetary policy statement. There is a near zero percent chance of a hike to the Fed Funds Rate. The statement could give some clues as to the future path of interest rates and when the unwinding of the Fed's massive balance sheet will begin.

The closely watched S&P 500 closed at yet another record high in Tuesday's trading session fueled by higher oil prices, positive economic data and solid quarterly earnings reports. The S&P 500 Stock Index closed at 2,477.13 yesterday, up nearly 11% for the year. In contrast, at the height of the Great Recession, the S&P closed at a low of 666 in early March 2009.


Tuesday - July 25  

The May S&P/Case-Shiller 20-City Index rose 5.7% year-over-year, in line with estimates and just below the 5.8% in April. Demand continues to outweigh supply in many key areas across the nation. Month-over-month, the 20-City Index rose 0.1%. The National Index saw a 5.6% annual increase in May, matching the April number and a gain of 1.0% from April to May. “Home prices continue to climb and outpace both inflation and wages,” said spokesperson David Blitzer.

The Conference Board reported that Consumer Confidence rose to the second highest level in 16 years due in part to the strong labor market. The Consumer Confidence Index rose to 121.1 in July, above the 116.8 expected and above the 117.3 recorded in June. The Conference Board said the consumers see the current economic expansion continuing into the second half of the year. The Consumer Confidence Survey® reflects prevailing business conditions and likely developments for the months ahead. This monthly report details consumer attitudes and buying intentions, with data available by age, income, and region.

The Federal Housing Finance Agency (FHFA) reports that its Home Price Index (HPI) saw a gain of 0.4% in May from April and was up 6.9% year-over-year. For the nine census divisions, the 12-month changes were all positive, ranging from +4.0 percent in the Middle Atlantic division to +8.7 percent in the Pacific division. The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by Fannie Mae and Freddie Mac.


Monday - July 24  

The National Association of REALTORS® (NAR) reported on Monday the Existing Home Sales in June fell 1.8% from May to an annual rate of 5.52 million units, below the 5.58 million expected. Sales are up 0.7% year over year, the second lowest of 2017. Within the numbers it showed that first-time buyers made up 32% of total sales in June, slightly lower than 33% both in May and a year ago.

The NAR said that the decline in sales is due in part to the ongoing theme … a low supply of homes for sale on the market.The NAR went on to say that total housing inventory is at a 4.3-month supply at the current sales pace and has fallen year-over-year for 25 consecutive months. Normal inventory levels are around 6%. The median existing-home price for all housing types in June was $263,800, up 6.5% from June 2016 ($247,600).

The Federal Open Market Committee meeting kicks off this week beginning on Tuesday and ends Wednesday at 2:00 p.m. ET with the release of the monetary policy statement. There is currently a near zero percent chance of a hike to the short-term Fed Funds Rate. Investors will be looking for clues as to when the Fed will begin to taper its massive $4.5 trillion balance, which consists of Mortgage Backed and Treasury securities.


Friday - July 21  

Ellie Mae reported its June Origination Insight Report this week revealing that the percentage of purchase home loans relative to refinances remained steady at 68% of all closed loans. The percentage of refinances remained at 32% for the second straight month. The report went on to say that the average time to close all loans increased one day to 43 days in June. The time to close a refinance held at 41 days, while the time to close a purchase increased to 43 days.

Motor club AAA reports that that gas prices could rise by $0.10 this summer and could top this year's highest national price of $2.42. Currently, the national average price for a regular gallon of gas is at $2.28. AAA said the anticipated volatility is due to refiners continuing to run record levels of crude oil, which is creating high levels of gasoline and diesel. In addition, the summer season’s strong demand is expected to stay on pace and may even set a new record high between now and Labor Day.

The major Stock indexes are lower to end the week but remain near all-time high levels fueled in part by technology stocks. The closely watched S&P 500 closed at 2,473.45 on Thursday, an all-time high closing record. Back in March 2009, the S&P hit a low of 666 before at the height of the Great Recession. Shares of Amazon hit a record high of $1,034 this week as the on line retailer looks to take over the retailing sector and many other sectors in between.


Thursday - July 20  

Business activity declined in July from June in the Philadelphia region and fell to its lowest level of 2017. The Philadelphia Fed Manufacturing Index fell to 19.5 in July, down from the 27.6 registered in June and below the 22 expected. Any reading above zero indicated improving conditions. Within the report it showed that firms remained generally optimistic about future growth, while more than one-third of the manufacturers expect to add to their payrolls over the next six months.

Mortgage rates edged lower this week after rising two consecutive weeks in a row. The lower rates came after political gridlock in Washington D.C., which pushed investors into the safe haven of the Bond markets. Freddie Mac reported that the 30-year fixed rate mortgage fell to 3.96% from 4.03% with 0.6 in points and fees. Last year this time the rate was 3.42%.

Real estate listing company Zillow reported on Thursday that median home prices rose to all-time highs in June, due in part to a severe shortage of low-priced starter homes for sale. The median price in June was a bit north of $200,000, up 7% from last year. Housing inventories have fallen 11% in June year over year with big declines coming from San Francisco (26%) and Minneapolis-St. Paul down 30%.


Wednesday - July 19  

The Commerce Department reported on Wednesday that Housing Starts in June surged 8.3% to an annual rate of 1.215 million units, the highest since February and after three straight monthly declines. Single-family starts, which represents the largest share of the residential housing market, rose 6.3%, while the multi-family dwelling sector soared by 13.3%. Housing Starts were up 2.1% from June 2016. Higher lumber prices and shortages of workers and land space could be potential hurdles to jump in the near future for new home building.

The Mortgage Bankers Association (MBA) released its weekly mortgage report showing that mortgage application volumes rose in its latest survey. The MBA's Market Composite Index, a measure of total mortgage loan application volume, rose 6.3% in the latest week. The refinance index jumped 13%, while the purchase index was up 1%. In addition, the 30-year fixed conforming mortgage rate was unchanged at 4.22%. Jumbo 30-year rates climbed to 4.19% from 4.18%, while the FHA rate fell to 4.10% from 4.12%. Those rates usually carry at least a 0.30 point added on top.

Cost cutting continues at one of the nation's largest banks in the form of branch closures as on line banking ramps up. Wells Fargo recently reported that it will close 450 branches across the nation. The bank said it will close 200 branches in 2017 and 250 in 2018 and has vowed to cut annual costs by $2 billion by the end of 2019. In this digital age, on line and mobile banking has moved to the forefront and will most likely grow even larger in the years to come.


Tuesday - July 18  

Fannie Mae continues to project that the pace of growth in total home sales will slow to 3.3% this year. Fannie believes that rapid home price gains amid scarce supply will remain a hurdle for potential home buyers, despite improvements in credit access. In addition, Fannie forecasts economic expansion will slow in the second half of 2017.

Home builder confidence slipped in July on concerns of rising costs for materials, particularly higher lumber prices. The NAHB Housing Market Index fell two points to 64, the lowest level in eight months and below the 66 expected. All three of the surveys components declined, which include current sales, sales expectations and buyer traffic. However, the index is still well into positive territory where any number over 50 indicates more builders view conditions as good rather than poor.

Corporate earnings season is well underway with the spotlight today on Goldman Sachs and Bank of America. Investment banking giant Goldman Sachs reported that both revenues and earnings beat expectations, but trading revenues in fixed income products are down 40% from the same period last year. Bank of America reported that it too beat on revenues and earnings while trading revenues saw a 14% slide in its fixed income division.


Monday - July 17  

A recent report reveals that an increasing number of U.S. companies are finding it difficult to hire new workers, and some have even raised wages. The National Association of Business Economists (NABE) reports that "slightly over one-third of panelists reports that their firms have experienced some difficulty in hiring," NABE survey chair Emily Kolinski said in a statement. The share of firms reporting increased wages rose 8% from April to 47%.

Economic data continues to stream in on the weak side with today's lower-than-expected regional manufacturing numbers. The Empire State Manufacturing fell to 9.8 in July, below the 13.0 expected and down from 19.8 in June. The closely watched new orders and shipment indexes both declined. In addition, the labor market component saw just a small increase in employment and no change in hours worked. Indexes assessing the six-month outlook remained favorable, though firms were somewhat less optimistic about future conditions than in June.

It is a big week for earnings, which could dictate the direction of Stock and Bond prices as well as mortgage rates. Wall Street will see numbers from Bank of America, Morgan Stanley, Goldman Sachs, Microsoft, IBM J&J and Netflix. Analysts estimate that second-quarter earnings for the S&P 500 companies rose 8.1% from a year earlier. First-quarter earnings posted their best numbers since 2011, according to Thomson Reuters data.


Friday - July 14  

The Commerce Department reported that Retail Sales fell 0.2% versus the +0.1% expected in June, the second monthly decrease in a row. Consumers spent less at department and food stores; receipts at gas stations also declined. Retail sales ex-autos fell 0.2%, below the +0.2% expected. Retail Sales rose 2.8% year-over-year in June.

The inflation reading Consumer Price Index (CPI) was unchanged in June, which was in line with expectations. On a year-over-year basis, CPI fell to 1.6% from 1.9%, the lowest annual number since October 2016 as costs declined further for gasoline and phone services. The Core CPI, which strips out volatile food and energy, rose 0.1% versus the 0.2% expected, while the year-over-year reading remained relatively low at 1.7%.

Fannie Mae reports that consumers confidence in home selling strengthened in June pushing a key index to a record high. The Home Purchase Sentiment Index rose 2.1% to 88.3 in June, matching the all-time high set back in February. The net share who reported that now is a good time to sell a home reached a new record high, increasing an additional 7%, outpacing the net 3%increase of Americans who reported that now is a good time to buy a home.


Thursday - July 13  

Inflation at the wholesale level was tame in June as an increase in the cost of services was offset by a decrease in energy prices during the month. The Producer Price Index (PPI) rose 0.1% versus the -0.1% expected, while the Core PPI was up 0.1%, just above the 0.2%expected. Year-over-year PPI fell to 2% from 2.4% in May, while the Core also fell to 2% from 2.1%. A low inflation environment continues to hold interest rates at low levels.

Freddie Mac reports that the 30-year fixed mortgage rate rose to 4.03% this week as Bond prices declined and yields pushed higher after last week's positive June Jobs Report. The rate is up from 3.96% in the previous week and up from 3.42% last year this time. And though rates have edged higher, they are low by historical standards.

Freddie Mac makes homeownership and rental housing more accessible and affordable. Operating in the secondary mortgage market, it keeps mortgage capital flowing by purchasing mortgage loans from lenders so they in turn can provide more loans to qualified borrowers. Freddie Mac's mission is to provide liquidity, stability, and affordability to the U.S. housing market in all economic conditions extends to all communities from coast to coast.


Wednesday - July 12  

Mortgage rates edged higher in the latest week after a strong June Jobs Report sent Bond prices lower and yields higher late last week. The Mortgage Bankers Association (MBA) reported on Wednesday that the 30-year fixed conforming mortgage rate rose to 4.22% in the latest week, while jumbo and FHA rates jumped 9bp and 8bp respectively to 4.19% and 4.12%. In addition, the MBAs Market Composite Index, a measure of total mortgage loan application volume, fell 7.4% in the latest week as rates increased. The refinance index fell 13%, while the purchase index declined 2.5%.

Fed Chair Yellen was on Capitol Hill this morning delivering her semi-annual testimony in front of Congress. Ms. Yellen said that the Fed's balance sheet would most likely start to shrink this year, while the economy is on a steady positive course. In addition, there is near full employment. Ms. Yellen went on to say that additional gradual rate hikes to the benchmark Fed Funds Rate are needed in next few years, but inflation in response to the economy is the key uncertainty. Ms. Yellen said, "the Federal Funds Rate would not have to rise all that much further to get to a neutral policy stance."

Due to the recent increase in home prices, the number of underwater mortgages have decreased while in the same time increasing the amount of equity available to homeowners. Black Knight Financial Services reports that lendable equity increased $695 billion from the same period last year bringing the total equity to near a staggering $5 trillion. Meanwhile, the number of underwater borrowers fell by 35% and down 16% in the first quarter of 2017. There are now 1.8 million borrowers underwater, the first time it has fallen below two million since 2006, though well above the 750,000 seen in 2005.


Tuesday - July 11  

Tight inventories of homes for sale continue to fuel higher home prices, reports CoreLogic. The CoreLogic Home Price Insights report showed that prices rose 6.6% from May 2016 to May 2017 and were up 1.2% from April to May. CoreLogic forecasts that home prices will rise by 5.3% from May 2017 to May 2018. "The market remained robust with home sales and prices continuing to increase steadily in May. While the market is consistently generating home price growth, sales activity is being hindered by a lack of inventories across many markets," says Frank Nothaft, Chief Economist at CoreLogic. 

A recent report shows that FICO scores hit an all-time high average of 700 after recently bottoming out 686 during the housing crisis. FICO scores range from 300 to 850. A score of 700 is considered "very good credit", says a FICO spokesperson. However, FICO said that credit card balances and delinquencies are also edging higher and the company will be monitoring that situation carefully.

CoreLogic also reported today that mortgage delinquencies declined in April as the housing sector continues to improve. The analytics firm said that those 30 days or more past due including those in foreclosure, fell 4.8% of total mortgages in April, down from the 5.3% recorded in April 2016. “Most major indicators of mortgage performance improved in April, showing that the market continues to benefit from improved economic growth and home price increases,” CoreLogic Chief Economist Frank Nothaft said.


Monday - July 10  

Buyout talks have unraveled for former fashion icon Abercrombie and Fitch, the latest mall fixture plagued by online shopping. The retailer announced 60 store closings in 2017 and shuttered 53 stores last year. Express and American Eagle Outfitters were rumored to be potential buyers.

The U.S. Senate is back in session today and trying to diagnose the health of their next move on the repeal and replacement of the Affordable Care Act, commonly known as Obamacare. The House of Representatives passed a healthcare overhaul bill in May. Among the challenges for Congress: reducing healthcare costs while minimizing the loss of coverage to millions of Americans.

Markets opened little changed this morning. Potential market movers are many the latter half of the week, including reports on retail sales as well as wholesale and consumer inflation. Earnings reports for second quarter start to filter in when big banks release their numbers Friday. Global yields also need to be watched after last week’s spikes rattled U.S. markets.


Friday - July 7  

June job growth soared with 222,000 new jobs, well above expectations, the Labor Department reported. April was revised up from 174,000 to 207,000, and May was revised up from 138,000 to 152,000. With these revisions, employment gains in April and May combined were 47,000 more than previously reported. The unemployment rate was little changed at 4.4 percent. Employment growth has averaged 180,000 per month in 2017, in line with the average monthly gain of 187,000 in 2016. Average hourly earnings have risen 2.5 percent in the last 12 months.

Slip, sliding away. That’s what can be said about both Brent and WTI oil prices this week. Despite the commitment of OPEC and non-OPEC nations to trim production by 1.8 million barrels a day and hopefully curb the global oil surplus, nary a dent has been made. Both Brent and WTI fell 3 percent today, to $46.68 and $44.14 respectively.

A chip off the old block? Samsung’s memory chip division is catapulting the tech giant to record high quarterly profits, according to recent estimates. While final earnings won’t be released until the end of July, Samsung estimates its second-quarter operating profit to be above $12 billion, well above analyst estimates. Revenue is also estimated at 18 percent above a year ago.


Thursday - July 6  

Lower gas prices and higher consumer confidence may be just the ticket for Americans to spend more on fun in the sun this summer. Yesterday’s release of the Vacation Confidence Index showed Americans are on track to spend a total of $101.1 billion on vacations this year, a 12.5 percent increase over 2016 and the first time in eight years that spending has exceeded $100 billion. Allianz Global Assistance, the keeper of the index, suggests this increase could be a result of Americans having a brighter picture of the economy. The cost to fill up on a tank of gas and head out on a road trip is at record lows.

On the labor front, ADP National Employment Report showed U.S. private employers added 158,000 jobs in June, below expectations. Private payroll gains in May were revised downward by 23,000 to 230,000. Non-farm payrolls for June will be released tomorrow and is forecast to show 179,000 new jobs.

Want dinner or dessert delivered to your door? There’s an app for that. More restaurants are jumping on the bandwagon to provide consumers ease and convenience with food delivery. McDonald’s has partnered with Uber. Baskin Robbins has hooked up with DoorDash. Buffalo Wild Wings, Panera, Burger King and others are in deep to make their consumer experience relevant in today’s market. A recent study showed ordering food from a restaurant or other food service provider via mobile app, text message or internet climbed 18 percent in March from March 2016.


Wednesday - July 5  

The biggest opportunity for market volatility today will come from the release of the Fed’s June FOMC meeting minutes at 2 p.m. ET. Interest in the timing of future short-term interest rate hikes will be overshadowed by indications of when the Fed will start to reduce the bank's $4.5 trillion balance sheet. That being noted, any mention of financial stability concerns will still cause a stir.

Speaking of stirring the pot, North Korea tested an intercontinental ballistic missile (ICBM) Tuesday that they claim is capable of carrying a nuclear warhead; ICBMs have a minimum range of approximately 3,400 miles. U.S. Secretary of State Rex Tillerson said the test was a “new escalation of the threat” to the United States and its allies and called for stronger action against North Korea’s weapons development program.

Finally, days after Tesla announced its first mass-market electric car will hit the streets, Sweden-based Volvo announced all new car models will be electric or hybrid starting in 2019. The company is the first major automaker to set a date to phase out the internal combustion engine.


Monday - July 3  

On the eve of our nation’s biggest day for firing up the BBQ, the price of beef has ground down to be competitive with pork and poultry. An explosion in production has yielded a booming supply and sparkling prices at the supermarket reminiscent of 2014. Retail prices for U.S. Ground beef are down 4.3 percent from 2016, and the U.S. Department of Agriculture estimates production will continue to rise 4 percent this year. Grab the pickles and ketchup. It’s grilling time.

Tesla announced it’s set to make first deliveries of its electric Model 3 this month. The car has a 215-mile range on one charge, can seat 5 adults, and accelerate from 0 to 60 in less than 6 seconds. The mass-market car is a smaller model set to appeal to the general public in affordability. The starting price is $35,000, compared to the Model S with a base price of $69,200 and Model X at $83,700.

Q2 2017 is one for the books while Q3 is now open for business. The S&P 500 scored its biggest gain for the first half of the year since 2013. The Nasdaq posted its best first half since 2009. U.S. stock index futures are higher this morning, with all three major indexes on track to begin Q3 up. Trading volume is expected to be light this week as Stock markets close at 1 p.m. ET and Bond markets at 2 p.m. ET today. Markets are closed tomorrow in observance of July 4th.


Friday - June 30  

Inflation remained tame in May as measured by the Core PCE rising by 0.1% in May from April, while the Fed's favorite inflation gauge, the annual Core PCE fell to 1.4%, well below the Fed's target range of 2%. Personal Incomes in May rose 0.4%, just above the 0.3% expected while Spending was up 0.1%, in line with estimates. With incomes rising more than spending, the personal saving rate rose 5.5% in May from 5.1% in April.

The week, month, quarter and the first half of the year comes to an end today with Mortgage Bonds near unchanged after a volatile week of trading. Stocks, as measured by the S&P 500, are up 8% for the first six months of the year, while mortgage rates fell to the lowest level of 2017 this week to 3.88% as reported by Freddie Mac. The price for a barrel of West Texas Intermediate crude oil has fallen to $45.55 today from $53.72 at the end of 2016.

Just the facts! With the 4th of July being celebrated next week, here are a few facts that may amaze your friends and family at your barbecue for the holiday.Congress made Independence Day an official unpaid holiday for federal employees in 1870. In 1938, Congress changed Independence Day to a paid federal holiday. Only John Hancock actually signed the Declaration of Independence on July 4, 1776. All the others signed later. The stars on the original American flag were in a circle so all the Colonies would appear equal. In 1776, there were 2.5 million people living in the new nation. Today the population of the U.S.A. is 326 million. Barbecue is also big on Independence Day. Approximately 150 million hot dogs and 700 million pounds of chicken are consumed on this day. They also spend $92 million on chips, $167.5 million on watermelon, and $341.4 million on beer. Fireworks have been a major part of Fourth of July since the earliest celebrations.


Thursday - June 29  

Mortgage rates edged lower in the latest week falling to levels not seen since the week of the November presidential election. Freddie Mac reports that the 30-year fixed rate mortgage fell to 3.88% this week with 0.5 in points and fees. That is down from 3.90% in the previous week though above the 3.48% seen last year this time. Market experts had forecasted that mortgage rates would average 4.50% this year, but so far they have averaged 4.08%.

The final read on first quarter Gross Domestic Product rose by 1.4% from 1.2% in the second reading. And though economic growth ticked higher, it is still an anemic reading. Consumer spending edged higher by 1.1% from 0.6% due in part to an increase in spending on healthcare and financial services, this too is at a low level. The Atlanta Fed has since lowered their second quarter GDP expectations to 2.9% as of today from 4% back in late May.

A new report from online listing real estate agent Trulia revealed that housing inventory declined nearly 9% from last year in the second quarter of 2017. Home inventories have fallen for nine consecutive months and are down a whopping 20% from five years ago. Low inventories have been key in the recent rise in home prices and many experts feel that the shortages are having a big impact on the market with no relief in sight.


Wednesday - June 28  

Fed Chair Yellen was speaking in London yesterday and mentioned that she feels that, "asset valuations are somewhat rich if you use some traditional metrics like price earnings ratios." Translation: Stock prices may be too high. Ms. Yellen also soothed the Mortgage Bond market by saying the Fed intends to very gradually and predictably shrink its massive $4.5 trillion balance sheet. Ms. Yellen went on to say that she believes there will not be another financial crisis in our lifetimes.

Signed contracts to purchase homes declined for the third straight month due in part to the same theme ... a lack of homes on the market for sale. The National Association of REALTORS® reported on Wednesday that Pending Home Sales in May fell 0.8%, below the +0.5% expected, but better than the -1.7% recorded in April. The index was down 1.7% from May 2016 and was the second straight annual decline. Lawrence Yun, NAR chief economist, says "Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast."

Mortgage rates remained steady in the latest week and remain at the 2017 lows and just above all-time lows. The Mortgage Bankers Association reports that the 30-year fixed conforming mortgage rate ($424,100 or less) was unchanged at 4.13% with 0.32 in points. The 30-year jumbo rate (greater than $424,100) was essentially unchanged at 4.09% with 0.20 points, while the FHA rate was also near unchanged at 4.02% with 0.41 in points. The survey covers over 75% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.


Tuesday - June 27  

Home price gains remained steady across the nation due in part to low home loan rates and a limited supply of homes for sale. The S&P/Case Shiller 20-city Index saw a gain of 5.7% from April 2016 to April 2017. A spokesperson for the index said that home prices continue to rise faster than inflation. “Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.

Black Knight Financial Services reported on Tuesday that home prices hit their all-time high in April of $275,000. Home prices rose 3.6% in April from the beginning of 2017 and were up 1.5% from March and up 6% from April 2016. Black Knight reported that the state of Washington continues to outperform the nation, leading all states in monthly appreciation for the third consecutive month and with the Seattle metro area seeing an 8.4% gain in home prices since the start of the year�.

The Conference Board released its Consumer Confidence Index for June, which came in at 118.9, above the 116.7 and above the 117.6 recorded in May. The report showed that consumers' assessment of current conditions improved to a nearly 16-year high in June. On an overall basis, "Consumers anticipate the economy will continue expanding in the months ahead, but they do not foresee the pace of growth accelerating,” said Lynn Franco, Director of Economic Indicators at The Conference Board.



Monday - June 26  

Fannie Mae released its second quarter 2017 Mortgage Lender Sentiment Survey revealing that as mortgage demand cools and competition heats up, more lenders are planning to ease credit standards. Concerns regarding economic conditions were a top driver for changes in lending standards. Across the three loan types, the share of lenders who reported growth in purchase mortgage demand dropped to the lowest net reading in years for the second-quarter period.

Demand for products meant to last at least three years fell in May by the most in 18 months, signaling that the manufacturing sector is slowing as the year progresses. May Durable orders fell 1.1% from April for the second straight month of declines. The declines were led by civilian and military aircraft orders, where orders plummeted. However, orders for new automobiles along with industrial machinery, steel and other metals, increased.

As the first half of 2017 comes to an end this week, the closely watched S&P 500 Stock Index is up 9% having benefited from the post-presidential election Stock market exuberance. Plans for lower taxes and regulations along with talk to build infrastructures across the U.S. have led Stock prices higher since early November. The S&P is hovering near its all-time closing high of 2,453 set on June 19. That is in stark contrast to the low of 666 hit back on March 9, 2009, which was the height of the great Recession.
 

Friday - June 23  

Mortgage rates remained just above all-time lows this week, as reported by Freddie Mac. The 30-year fixed-rate mortgage was 3.90 for the week ending June 22 with 0.5 in points and fees. Last year this time the rate was 3.56%. Freddie Mac said that mortgage rates continue to hover near year-to-date lows "amidst ongoing economic uncertainty."

Americans filing for first time unemployment benefits continue to remain at levels not seen since the early 1970s as the sector contiues to strengthen. Weekly Initial Jobless Claims rose 3,000 to 241,000 in the latest week. This is the 120th consecutive week that claims have been below the 300,000 threshold, the longest stretch since 1970. The four-week moving average of claims, which irons out seasonal abnormalities, rose 1,500 to 244,750 last week, the highest since early April.

The Commerce Department reports that New Home Sales in May jumped nearly 3% from April to an annual rate of 610,000, above the 599,000 expected. From May 2016 to May 2017, sales were up almost 9% with May being the second highest tally of 2017. Tight inventories of just 4.6 month supply, pushed the median price to a record $345,800. A more healthy inventory level is six months’ supply.


Thursday - June 22  

Yesterday, oil prices hit lows not seen since August 2016 and have lost 20% since topping out in February, this despite OPECÃÆâ™ÃƒâšÃ‚¢ÃƒÂ¯ÃâšÃ‚¿ÃâšÃ‚½ÃƒÂ¢Ã¢ï¿½Å¾ÃâšÃ‚¢s vow to cut production and balance the market. The S&P energy index has declined 15% this year. Lower oil prices could affect inflation.

The Fed’s favorite inflation gauge, the Core Personal Consumption Expenditure on an annual basis, fell to 1.5% in April, well below the Fed's target range of 2%. Oil is a major staple of the economy and is used in fueling transportation, heating homes, making plastics and many other consumer products. If oil prices decline, the cost to the end consumer drops, thus lower inflation and vice versa.

In the current low inflation environment, it could be tough for the Fed to raise rates anytime soon. Currently, there is little chance of a hike to the short-term Fed Funds Rate in July, and just a 13% chance in September. Yesterday, Philadelphia Fed President Harker (voter) said he could see the Fed’s balance sheet unwinding beginning in September, but not if inflation weakens. Mr. Harker went on to say that if the balance sheet unwinding were to begin, rate increases would pause. The Fed's balance sheet is made up of Treasury and Mortgage Backed Securities and is valued at $4.5 trillion.


Wednesday - June 21  

May Existing Home Sales rose 1.1% from April to an annual rate of 5.62 million units, above the 5.52 million expected. The median price rose to an all-time high of $252,800. Sales were up 2.7% from May 2016. Low inventories continue to be a problem with supplies at 4.2 months where healthy supply is seen at six months. "We have a housing shortage, we may even use the term housing crisis in some markets," NAR chief economist Lawrence Yun said.

Mortgage rates were steady in the latest week and remain just above the all-time lows, whilemortgage application volumes rose. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total mortgage loan application volume, rose 0.6% in the latest week. The refinance index jumped 2.1% to 1526.8, the highest level since November 2016, while the purchase index fell 1%. The MBA also reports that the 30-year fixed conforming mortgage rate was unchanged at 4.13%, while jumbo and FHA rates rose 2bp and 4bp, respectively, to 4.08% and 4.04%.

S&P Dow Jones Indices and Experian reported on Tuesday that borrowers are going into default on their first mortgages less often than at nearly any point in the last 13 years. The default rate for first mortgages fell to 0.64% in May, down from 0.69% in April. The default rate in May was the second lowest for any month in nearly 13 years.
 

Tuesday - June 20  

Residential real estate company Redfin reports that despite the shortage of supply, home sales increased 7.5% in May from last year, while the median sale price rose 6.8% year-over-year to $288,000. Inventories fell to just 2.7 months of supply where a typical number is around six months. This anemic supply number is the reason for the continued increase in sales prices. In addition, the typical home went under contract in 37 days, setting a new record for home-selling speeds.

Fannie Mae reported its June Economic and Housing Outlook revealing that the current economic expansion, now in its ninth year, is forecasted to see full year 2017 Gross Domestic Product at 2.0%. After anemic consumer spending of 0.6% in the first quarter of 2017, it is expected to rise by 3.1% in the April-May-June period. In the housing market, a labor market shortage and tight inventory is constraining sales and pushing prices higher. Fannie Mae expects total home sales to rise 3.2% this year and total single-family mortgage originations to drop about 21% to $1.62 trillion.

The National Association of Home Builders reported on Monday that demand for new construction grows as housing stock ages. Housing stock has increased to 37 years, up from 31 a decade ago, which bodes well for remodelers and the Home Depot's and Lowe's of the world. In addition, the aging market of homes could spark a demand for new construction down the road.

 

Monday - June 19  

Housing shortages are increasingly becoming a problem in the markets as would be buyers are finding it more difficult to purchase a home. The National Association of REALTORS® said the shortage problem could soon turn into a "housing emergency if the discrepancy between housing demand and housing supply widens further, " said Lawrence Yun, NARs chief economist. The report went on to say that a lack a skilled workers to build new homes has been a problem over the past year.

The Bond market did lose a bit of ground this morning in response to New York Fed President Dudley's (voter) remarks. He said he is generally pleased with U.S. economy, while the unemployment and inflation levels are good. He added that wage growth and inflation should pick up after hovering at low levels in the past few years. Mr. Dudley went on to say that the recent yield curve flattening is not a negative sign that the Fed is hiking too much.

Despite the summer driving season upon us, which has historically led to higher prices at the pumps, gas prices declined in the latest survey. The national average price for a regular gallon of gasoline fell to $2.29, down from $2.34 a month ago. A year ago, prices were at $2.33. The all-time high was $4.11 recorded back on July 17, 2008. With a great deal of oil flowing through the pipes across the U.S., it does bode well for low gas prices.

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