The National Debt is currently: $17,067,618,735,583.00
The Dow last traded at 15,535. The S&P 500 is trading at 1,756. Gold is trading at $1,351 an ounce, while oil futures at $97.82 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.45/Gal.
Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.50%. 30-year Treasury Bond yields last traded at 3.59%. Rates on 30-year fixed-rate mortgages are a hair above 4.25% 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 3.5% coupon, containing 3.75% – 4.125% mortgages, pretty much the benchmark or how rate sheets are priced these days is currently trading at 102.68 about a .68 point (fee) better in price than where we were last Friday at this time. We were able to break out of the recent trading range we’ve been in for the last few months meaning we are seeing lower rates with the potential to go even lower. 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 the Governments shutdown is over but we are still feeling the effects. Growth is still anemic at best and employment is staggering, but according to our President the economy is growing and we are putting people to work. If this growth is ok with the current administration, I can’t wait until the next election. Is this what he won the Nobel Prize for?
A snapback in contracts for Boeing jets boosted orders for durable goods in September, but business investment softened again and underscored the inability of the economy to jump onto a faster-growth plane (sorry couldn’t resist that one). Orders for durable goods advanced 3.7% in September, led by a 57.5% increase in aircraft orders. Taking out the volatile transportation sector, new orders dipped 0.1% in September to mark the third straight decline, perhaps a sign that manufacturers grew cautious in anticipation of the government shutdown.
Business equipment spending should be driving economic growth with interest rates being the lowest in more than a half-century and banks showing a willingness to expand lending to business. What is missing is the confidence that economic growth will accelerate and that there will be profitable business opportunities in this country.
A gauge of consumer sentiment, the University of Michigan/Thomson Reuters consumer-sentiment index, fell to a final October reading of 73.2 the lowest since December from September’s reading of 77.5. Sentiment levels are watched closely to get a feeling for the direction of consumer spending. Separate data about home builders showed their confidence recently fell to the lowest level in four months.
On the Real Estate front: The National Association of Realtors reported sales of previously owned homes fell 1.9% in September because of higher prices and rising mortgage rates. July/August reflected a four-year high in existing home sales. The median sales price of existing homes was up 11.7% at $199,200 compared to a year ago. The number of months it would take to sell all the homes now on the market was little changed at 5.0 months. Locally here in the El Dorado Hills/Cameron Park areas as of Sept 13th we have about 3.4 months of inventory based on closed sales and 2.8 months based on pending sales. The average days-on-market is about 30. In the last month list prices have risen by 2.0% while sales price has dropped by 10.8%. The median home price is $445,000.
On the Employment front: The U.S. created a modest 148,000 jobs in September but the number of people hired in August was higher than previously reported, indicating an economy on a zigzag course heading into the government shutdown. The nation’s unemployment rate, meanwhile, fell a tick to a five-year low of 7.2%, as more people found work. It may take several months to learn the extent of the damage done by the Government shutdown. In 2011, the last time our politicians kicked the can down the road, hiring sprang back quickly after a drawn-out fight in Washington over how much the government spends and the level of the national debt.
We have added an average of 177,000 jobs through the first nine months of 2013, but the pace of hiring has slowed to a 143,000 rate in the third quarter. That also has to worry the Fed putting the thought of tapering their bond purchases much further down the road. We are not seeing any acceleration in the underlying pace of economic growth and it shows the job market is actually weaker than they expected. The Fed wants to see the jobless rate fall to 6.5%, but won’t consider a lower rate a sign of progress if the decline is largely the result of people dropping out of the labor force. What’s more, the Fed will probably be reluctant to taper its stimulus until Democrats and Republicans agree to a long-term solution on budget matters that ends of threat of another major conflict harmful to the economy. The temporary truce that ended the shutdown expires in a few months.
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.
Please visit my website at: http://bill.bartok.stanfordloans.com
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