The Dow is currently trading at 13,050 down 80 pts over last week The S&P 500 is trading lower at 1,402. Gold is trading at $1,686 an ounce, while oil futures at $96.44 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.85/Gal.
Yields on 10-year notes, which move inversely to prices, are trading at 1.58%. 30-year bond yields are trading at 2.71%.
Mortgages or FNMA 3.5% MBS (Mortgage Backed Security) is currently at 105.75. I’ve been saying for some time now, (ok, more than a month), that we were due for a correction and to lock if you could, well we have now gone into that correction. On July 25 we reached an all time high Price) of 106.31, and because it wasn’t able to hold, the correction began on Aug 2. We reached a critical support level (104.5) Aug 14 and we’ve now started to recover. Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.
In economic news this week; Home prices bounced higher for a second month in June, according to the S&P/Case-Shiller 20-city index which showed the strongest back-to-back monthly advance in the more than the decade-long history of the price gauge. Even with the gains, prices have still fallen a long way from their 2006 peaks, roughly 31%. Pending home sales climbed 2.4% in July to the highest level since April 2010, when a home-buyer tax credit was set to expire. The National Association of Realtors reported pending-home-sales index rose to 101.7 in July from 99.3 in June, which is 12.4% above July 2011 levels.
Consumer confidence fell to a nine-month low in August as Americans grew more worried about business conditions and the chances of finding a job. The decline in confidence coincides with a series of economic indicators that indicate U.S. growth slowed over the spring and summer. We’re also in an election period so this could be a rather volatile index.
The economy apparently grew “gradually” last month, as improving retail and other service-sector activity was weighed down by softening activity in manufacturing, according to a collection of anecdotes released by the Fed Gods. The Beige Book reported that activity expanded gradually in July and early August across most regions and sectors, compared to the previous assessment of “modest to moderate.” It’s all in the semantics, which of coarse is what the Fed is famous for.
Consumers boosted their spending in July by the biggest amount in five months as aftertax incomes continued to grow modestly. Personal spending rose 0.4% to mark the largest increase since February. The economy can’t grow much faster unless consumers boost spending, but that’s not expected to happen. The forecasts of growth in gross domestic product are to edge up slightly to 2.0% in the third quarter from a mediocre 1.7% in the second quarter. Inflation, meanwhile, appears to pose little threat. Prices rose less than 0.1% in July based on an index linked to consumer spending.
The big chief Ben Bernanke called the stagnation in the labor market a grave concern and said he was open to using more quantitative easing as needed to help the economic recovery. In a speech at the Fed’s Jackson Hole retreat this morning, Bernanke did not pre-commit to taking action, but he did reinforce the case for more asset purchases. Bernanke called current growth “tepid” and said the economy was “far from satisfactory.” I think this leaves little doubt where the Fed is headed.
And now for the Rant: Last week I wrote about Kaitlin Nootbaar, a straight-A Oklahoma high school student, who is being denied her diploma because she used the word “hell” in her graduation speech as valedictorian. Well if the word is ok for a presidential candidate at the Republican National Convention; I think it’s OK for a VALEDICTORIAN commencement speech. What power do these school leaders think they have?
This is not just an isolated incident. A similar incident occurred in June when high school senior Anthony Cornist was denied his diploma because, school officials said, his friends and family cheered so loudly for him that it disrupted the ceremony. The school demanded that the student complete 20 hours of community service to obtain the certificate. Really? I don’t remember anywhere in the fine print where is says that if you complete the required curriculum and earned your diploma that a school can withhold it “at will”! This is my reality show! It’s my opinion and I’m sticking to it!
If you know anyone who can benefit from my services, please call me. My greatest goal is to see clients and friends happy. I guess that’s why I love providing mortgage financing. It’s an immediate gratification when you can help someone purchase a home, or lower their payment on their existing home.