Happy Valentine’s Day to all you star-crossed lovers out there and to those of you who may not have a Valentine to celebrate with, here’s hoping you find yours.
The National Debt is currently: $17,291,805,201,598.00 this is actually lower by about 34 BILLION. I post this so we will be aware of what we are leaving the next generation.
The Dow last traded at 16,115 400 pts higher than where it was last Friday. The S&P 500 is trading at 1,835. Gold is trading at $1,319 an ounce, while oil futures at $100.24 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.23/Gal.
Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.72%. 30-year Treasury Bond yields last traded at 3.69%. Rates on 30-year fixed-rate mortgages are about 4.50% this week. MBS yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. Rising yields mean higher consumer-mortgage rates.
The FNMA 30-year fixed 4.0% coupon, containing 4.25% – 4.625% mortgages, pretty much the benchmark or how rate sheets are priced these days is currently trading at 104.22 about .75 worse than where we were last Friday at this time. Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate. The higher the number (price), the better the rate.
In economic news this week; the reader’s digest version is it looks like the economy is taking a breather tin the first part of the new year with retail sales falling and employment slowing. We have a new Fed Chief Janet Yellen and she spoke out this week for the first time since taking over.
A gauge of optimism among small businesses rose slightly to 94.1 in January, led by sales expectations and hiring plans. Among the 10 components of the National Federation of Independent Business’s gauge, three rose last month, five fell and two were unchanged. The index remained lower than an average reading of 100 before the recession.
New Federal Reserve Chairwoman Janet Yellen said Tuesday that markets should expect the central bank to continue to follow the low-interest-rate path laid out by her predecessor Ben Bernanke. “Let me emphasize that I expect a great deal of continuity in the Federal Open Market Committee’s approach to monetary policy,” Yellen said in remarks prepared for a hearing of the House Financial Services Committee. “I served on the Federal Open Market Committee as we formulated our current policy strategy and I strongly support that strategy,” Yellen said.
Yellen’s remarks closely tracked the language of the Fed’s last policy statement. She said that the central bank would taper the pace of its asset purchases at future meetings if the economy continued to improve as expected, although the pullback was not on a preset course. The Fed’s decisions about the pace of tapering are data dependent, she added. She added the Fed plans to hold short-term interest rates at zero “well past” the time the jobless rate falls below 6.5%. Her first semi-annual monetary policy testimony was about as bland as one could imagine. But then that’s no doubt by design, as she has no reason to say anything that would upset the current market consensus.
The government posted a budget deficit of $10 billion in January, the Treasury Department reported, as spending outpaced revenue in the month. Including the January deficit, however, the government’s red ink at least continues to contract from the year-ago period. For the first four months of the current fiscal year, the deficit has fallen 37%, ($184 billion, which is $107 billion lower than the same period a year ago) reflecting the economy’s continued improvement, rising tax revenue and modestly lower spending. What scares me is how long if ever it will take to stop spending more than we bring in in revenue.
Retail Sales fell 0.4% in January and the final two months of 2013 turned out weaker than initially reported, offering more evidence the economy may have softened toward the end of the year. What’s more, an originally reported increase in sales in December was wiped out to show a small decline. The increase in sales in November was also trimmed a notch. Consumers are the main source of economic growth and retail sales account for a large slice of their spending. The drop in sales in January and December suggests consumers still aren’t willing to splurge, a potentially worrisome sign for businesses and the broader economy.
Consumer sentiment was unchanged in February, with a preliminary reading of 81.2, which matched January’s final level, according to today’s report from the University of Michigan and Thomson Reuters. Details of the consumer-sentiment report show that a gauge of “expectations” increased to 73 in February from 71.2 in January. Meanwhile, the gauge of “current economic conditions” fell to 94 from 96.8. Sentiment levels are watched to get a feeling for the direction of consumer spending, which is the backbone of the economy.
On the Real Estate front: I know this is a repeat of last week but some bay not have seen the recent trend report. In our local area of Eldorado Hills to and including Placerville through January 15 2014: new listings are up 2% and 41% for the past year. Sales are down 8.6% for the month and down 28% for the year. Average price per sq foot is down 1.7% from December but higher by 10.8% for the year. Homes on average are selling for 94% of original list price. Average sales prices are down 6.2% from December but higher by 11.8% from last year. Based on closed sales we are currently at 4 months of inventory, the highest of the past year. Based on pending sales we are at 2.8 months. It would make sense then that we are also at the highest days-on-market of the year at 65. This number is higher by 58% over December.
On the Employment front: A gauge of competition for jobs fell in December to the lowest level in more than five years, but the labor market remains weak and it’s still too soon for workers to celebrate. There were 10.35 million jobless workers at the end of 2013, compared with 4 million job openings, translating to about 2.6 would-be workers per spot, according to the U.S. Labor Department. That ratio, down a bit from 2.7 in November, was the lowest since August 2008.
The number of Americans who applied to receive unemployment benefits rose last week and the gradual decline in claims since last year appears to have halted, perhaps another sign the labor market is not healing as fast as it was toward the end of 2013.
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