The Dow is currently trading at 12,735 up just 17 pts over last week The S&P 500 is lower as well by 2 pts at 1,353. Gold is trading at $1,590 an ounce, while oil futures at $86.80 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.44/Gal.
Yields on 10-year notes, which move inversely to prices, are trading at 1.49%. 30-year bond yields are trading at 2.58%. Mortgages or FNMA 3.5% MBS (Mortgage Backed Security) is currently at 105.72, having hit an all time high of 106.06 midweek. It’s a great time to lock in a rate if you can, while we’ve through the top of the current range (104 to 105) if we can’t sustain higher levels we will likely correct to the middle of the range. 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; U.S. consumers increased their debt in May by a seasonally adjusted $17.1 billion, the largest increase since last December. This is the ninth-straight monthly gain in consumer borrowing. Consumer sentiment is the lowest since December, with job concerns hitting results. The consumer-sentiment index fell to a preliminary July reading of 72 from 73.2 in June. The sentiment gauge, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87 in the year before the most recent recession.
The U.S. government ran a budget deficit of $60 billion in June, pushing the deficit to $904 billion for the first nine months of fiscal 2012. The Federal government spent $320 billion in June, 9.2% above the year-ago period. Receipts rose 4% to $260 billion. I’m fighting the urge to rant about this but then again it’s nothing new. It’s month after month and no one seems to care.
Wholesale prices rose slightly in June as higher costs of food, trucks and appliances offset another decline in energy costs. The producer price index rose 0.1% last month. Energy costs, thankfully, fell again, the fourth straight month decline, as the cost of electric power, home heating oil, diesel and propane all declined. The energy index dropped 0.9%. The lower cost of fuel is a plus for the economy at large, giving consumers more money to save or spend on other things. Energy is a major household cost.
The big news, if you can call it that, was the release of the Fed minutes from their meeting three weeks ago. Only a few Fed Gods thought that more asset purchases would be necessary, and several others said more action could be warranted if economic conditions deteriorated. The Fed Gods generally agreed that economic growth would remain moderate over coming quarters and then pick up very gradually. Since the meeting, there has been weak reports for manufacturing and unemployment for June, which may have pushed more Fed officials to support more easing.
On another note, Our oldest daughter turned 18 today so we are off you watch her “skydive” into adulthood literally, and then she’s off to the tattoo parlor to get her first “tat.” She says it’s her first adult decision that no one can tell her she can’t do. Normally I’d be scared but she’s an honors student, very well grounded (other than today’s skydiving stunt) and headed off to Western Washington University in September. We’re very proud of her. By the way our other daughter who’s 12 has a can of paint ready for her room the minute she’s gone.
If you know anyone who can benefit from having a great Mortgage Advisor, 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.