Happy Friday everyone,
The National Debt is currently: $17,175,096,615,579.00 I post this so we will be aware of what we are leaving the next generation.
The Dow last traded at 16,025 another all-time high. The S&P 500 is trading at 1,802 also another all-time high. Gold is trading at $1,244 an ounce, while oil futures at $95.06 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.25/Gal.
Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.75%. 30-year Treasury Bond yields last traded at 3.83%. Rates on 30-year fixed-rate mortgages are a hair above 4.375% 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 101.15 about a .25 points (fee) worse in price 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 the economy is still crawling forward albeit at a snail’s pace. Manufacturing slowed a bit, inflation fell slightly, retail sales inched a bit higher, employment seems to be improving, and housing is pulling back a bit.
The Philadelphia Fed’s manufacturing index slowed to a reading of 6.5 in November from 19.8 in October. Readings on general activity, new orders, shipments, and employment were positive but slowed from October. The index has been in positive territory for six straight months.
Lower gasoline prices likely freed up some cash for consumers in October, and they appear to have tuned out the drama in DC and gone shopping. Apparently the government shutdown in October did not deter consumers from showing up in auto showrooms and other stores: Retail sales rose 0.4% last month at the fastest pace since July. Retail sales account for about one-third of consumer spending, the main engine of economic growth. Yet over the past year retail sales have risen at a mild 3.9% pace, less than the 6.3% annual average in the U.S. going back to 1980.
On the inflation front: Consumer or Retail prices in the U.S. fell slightly in October because of a decline in energy costs, pulling down the annual pace of inflation to the lowest rate since 2009. The decline in consumer prices, the first since April, is yet another sign that inflationary pressure in the economy is largely absent for now. Over the past 12 months consumer prices have risen just 1%, the smallest increase since October 2009. Although low inflation is good for an economy, severe economic distress can occur when inflation turns into deflation, or falling prices. The core CPI, which excludes volatile food and energy costs, rose 0.1% in October.
Wholesale prices fell 0.2% in October, marking the second straight decline and reflecting the lack of inflationary pressure in the economy. Over the past 12 months wholesale costs have risen a scant 0.3%, the same as in September. Energy costs fell 1.5% last month, led by declines in gasoline and natural gas. Yet the food index rose 0.8% in what was the biggest monthly gain since March. Excluding the volatile categories of food and energy, core wholesale prices rose 0.2%, and they are up just 1.4% over the past 12 months.
On the Real Estate front: The National Association of Home Builders/Wells Fargo housing-market index , a gauge of home-builder confidence, was 54 in November, matching a downwardly revised reading for October, the lowest in four months, as sales expectations for single-family homes slightly declined . Results above 50 signals that builders are generally optimistic about sales trends. November’s pause comes after the index declined for two months, though the confidence gauge is still up 20% from a year ago.
The National Association of Realtors reported that sales of existing homes fell 3.2% in October, marking a second month of declines to the slowest pace in four months as rising mortgage rates and prices cut affordability. The sales pace in October was up 6% from the year-earlier period, a sharp drop from annual growth of more than 10% in September.
Although mortgage rates have been trending higher over the past six months, they remain relatively low. The average rate for a 30-year fixed rate mortgage recently hit 4.35%, up one percentage point from early May, but below an average of almost 7% over the decade leading up to the housing bubble’s peak.
On the Employment front: The Labor Department reported the number of new applications for unemployment benefits fell by 21,000 to 323,000 last week, putting new claims at their lowest level since late September. The average of new claims over the past month, a more reliable gauge than the volatile weekly number, dropped by 6,750 to 338,500.
Job openings at U.S. workplaces rose 1.82% in September from August, the U.S. Department of Labor reported.. Compared with same period in the prior year, September’s job openings rose 8.6%. With 11.26 million unemployed people in September, there were about 2.9 potential job seekers per opening. In September 2012, there were 3.4 potential seekers per opening. When the recession began in December 2007, there were less than two potential job seekers per opening. Employment seems to be getting better but at a snail’s pace.
You can visit my corporate website at: http://bill.bartok.stanfordloans.com
Mortgage Advisor MLO# 445991
The nicest compliment I can receive is the referral of your family, friends and co-workers.