Saint Patrick’s Day or the Feast of Saint Patrick is Sunday. St. Patrick introduced Christianity to Ireland in the fifth century. Congress, back when it could agree on things, proclaimed March as Irish-American Heritage Month in 1995. Originally, the color associated with Saint Patrick was blue. Over the years the color green and its association with Saint Patrick’s Day grew. Saint Patrick is said to have used the shamrock to explain the Holy Trinity to the pagan Irish, and the wearing and display of shamrocks and shamrock-inspired designs have become a ubiquitous feature of the day. Bring on the corned beef and green beer!
The Dow is currently trading at 14,509 higher by 141 pts after hitting another all-time high this week. The S&P 500 is trading higher at 1,561. Gold is trading at $1,592 an ounce, while oil futures at $93.34 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.85/Gal.
Yields on 10-year Treasury notes, which move inversely to prices, are trading at 2.05%. 30-year Treasury Bond yields are trading at 3.25%. Mortgage Bonds have been in a downward trend (higher rates) since Dec 5, 2012, and after breaking out of the current range to the high side a week ago, have since retreated back towards the bottom. The MBS (Mortgage Backed Security) FNMA 30-year fixed 3.0% coupon, containing 3.25-3.625% mortgages, pretty much the benchmark or how rate sheets are priced these days is currently at 102.56 today heading back to the upper end of the range (lower rates). Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate. Think of anything above 100 as a credit. The higher the number (price), the better the rate.
In economic news this week; Our Government ran a budget deficit of $203.5 billion in February, but don’t even get me started on this one!
The National Federation of Independent Business reported that its small-business confidence index edged up 1.9 points to 90.8% in February, but it remains low by historical standards. Companies cited weak sales as the biggest problem. Some 33% of small-business owners said sales were lower in the past three months compared to the prior three months, while only 19% reported higher sales in the same span. Credit was still hard to obtain for many small businesses. In other words, while the Fortune 500 are enjoying record high earnings, Main Street earnings remain depressed.
Job openings at U.S. workplaces increased slightly to 3.69 million in January from 3.61 million in December. Compared with same period last year, January’s job openings rose 8%. There were more than 4 million jobs open when the recession began in December 2007. The number of people who applied last week for new unemployment benefits fell to the second lowest level in five years, perhaps reflecting a rise in the steadily improving labor market. Yet the labor market is by no means fully healed. The jobless rate, at 7.7%, is still quite high and well above the 6.5% goal set by the Fed Gods. The Fed has said it plans to keep a key short-term interest rate at historic lows until the unemployment rate plunges.
Retail sales advanced a scant 1.1% in February but big enough to mark the biggest gain in five months. The figures suggest that consumer spending, the linchpin of the economy, is holding steady despite a spike in gasoline prices and higher payroll taxes thus far in 2013. The worry has been that spending would sag early in the year and act as a drag on growth. The retail report is the latest in a string of data that suggests the economy remains on a moderate growth path. What’s more, gas prices are starting to subside, home values are on the rise again and the stock market has hit new highs. That might support further increases in retail sales over the next few months.
In the inflation front: The producer price index rose 0.7% in February. Prices at the wholesale level are still on the low side, up only 1.7% over the past 12 months. The increase in February was spurred almost entirely by higher energy costs, which jumped 3.0% last month. Gasoline prices advanced 7.2% to mark the biggest gain since September, but the cost of natural gas, home-heating oil and diesel fuel also rose. While gasoline prices leveled off in early March, the economites believe energy costs could recede in the next few months. Food prices fell 0.5% last month, largely because of a decline in the cost of fresh and dry vegetables. Higher wholesale costs can translate into rising prices of consumer goods and services, but it usually takes a sustained increase. Slow global growth has generally constrained wholesale prices over the past few years except for occasional spikes in energy costs.
Consumer prices also rose in February at the fastest pace in more than three years, though longer-term trends show stability. Despite the CPI’s large jump in February, longer-term trends remain within the Fed’s target. The overall CPI and the core reading, which excludes volatile energy and food categories, increased 2% over the last 12 months. The expectation is that today’s data should continue to support the Fed’s accommodative policy stance.
The University of Michigan consumer-sentiment gauge dropped to a March reading of 71.8, the lowest level since December 2011, from a February reading of 77.6. However, consumers also faced uncertainty from effects of federal spending cuts. 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 start of the most recent recession. The economites watch sentiment data to get a feel for the direction of consumer spending.
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