The National Debt is currently: $17,075,739,815,861.00
Daylight Saving Time is one of the universe’s great mysteries, like the afterlife, or who really killed JFK. It’s one of the things you assumed you’d never understand. Then again do we really need too? It’s this weekend (Saturday night going into Sunday, to be exact). And since we spring forward and fall back, we’ll all be setting our clocks back Sunday fall morning to get an extra hour of sleep or whatever you choose to do with it. Like all great mysteries, the answers only beget more questions: Does your iPhone automatically update for Daylight Saving Time?
The Dow last traded at 15,556. The S&P 500 is trading at 1,754. Gold is trading at $1,315 an ounce, while oil futures at $95.09 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.37/Gal.
Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.60%. 30-year Treasury Bond yields last traded at 3.69%. 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 there is a plethora of economic news released this week mostly delayed due to the Governments shutdown so get your popcorn ready.
Industrial production in September had a 0.6% increase in September, but the reality is this is the biggest monthly gain in seven months. Overall industrial production increased at a 2.3% annualized growth rate in the third quarter. While not strong, it’s better than the 1.1% gain in the second quarter. These gains are at least on the positive side but still anemic compared to where we should be if we are in an economic recovery.
The Chicago purchasing managers index, while limited to the Chicago area, rose to 65.9% in October from 55.7% in September, to mark the best performance since March 2011. Any reading above 50 indicates expansion. This is an indication that companies were seemingly unaffected by the government shutdown. The gain in the headline index is the biggest in 30 years. On a national level, the Markit’s U.S. manufacturing purchasing managers’ index increased slightly to 51.8 in October below 52.8 in September.
Prices of wholesale goods fell slightly (0.1%) in September because of a sharp drop in the cost of food and inflation at the producer level fell to the lowest annual rate in four years. Excluding the volatile categories of food and energy, core wholesale prices edged up 0.1%. My take on this is that inflation is taking a very, very long nap.
On the consumer side, prices rose slightly in September because of higher costs for medical care, shelter and all forms of fuel, but there was barely a whiff of inflationary pressure in the broader economy. Separately, the Labor Department said the CPI gauge on which the annual cost-of-living adjustment to Social Security is based rose 1.5%. The Social Security Administration confirmed on Wednesday that the increase for 2014 will be 1.5%, down from 1.7% for 2013.
Retail sales fell 0.1% in September for the first time in six months, but the decline mostly stemmed from a drop-off in auto purchases that could prove temporary. Sales in most other retail businesses rose, indicating that consumers did not cut back much on spending in the month prior to the government shutdown.
Not surprisingly, the bottom fell out of consumers’ economic expectations this month, plunging a gauge of their confidence to the lowest level in half a year, as Washington’s partisan bickering shut down the government and worried global investors. The Conference Board, a research association, reported that its gauge of consumer confidence fell to 71.2 in October from 80.2 in September.
On the Real Estate front: Pending sales of homes dropped 5.6% in September, and were down 1.2% from a year ago, according to the National Association of Realtors. September is the first period in more than two years that pending sales weren’t greater than year-earlier levels. Lawrence Yun, NAR’s chief economist stated; “This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014.” At the local level Pending sales in the Eldorado Hills/Cameron Park/Diamond Springs areas was down 4.2% in September but up 10.8% from the same time a year ago. The good news for buyers is that rates have declined in recent weeks, with the average rate for a 30-year conventional fixed-rate mortgage recently hitting 4.25%. Still, NAR reported that housing affordability has hit a five-year low.
Even as annual home-price growth in August hit the fastest pace in more than seven years, recent data shows that monthly gains are slowing down. Home prices in August were up 12.8% from the year-earlier period, the fastest pace since early 2006, according to S&P/Case-Shiller’s gauge that tracks 20 cities. Of the 20 cities, 13 posted double-digit annual gains. Most likely pent-up demand and limited inventory have been supporting home prices. Some of that pent-up demand was unleashed in August when buyers rushed to lock in low mortgage rates and home sales spiked. Locally average price /sqft has averaged about 188 hitting a high of 193 in June. The median home price is $445,000.
On the Employment front: The number of Americans filing for unemployment benefits declined by 10,000 for the third week in a row, but claims are still above end-of-summer levels even though California said it fixed computer problems that kept thousands of applications in limbo. The good news is that businesses aren’t slashing jobs at a rapid pace. The bad news is that they also aren’t hiring fast enough.
Private-sector employment growth slowed in October, as firms adding the fewest jobs in six months and Washington’s partisan bickering over spending hit the labor market, payrolls processing firm Automatic Data Processing Inc. reported Wednesday. Private employers added 130,000 jobs this month, the fewest since April and down from 145,000 in September. The broader trend also shows a weakening: Over the three months through October, the economy gained an average of 142,000 jobs per month, down from an average of 220,000 at the start of the year. “Any further weakening would signal rising unemployment. The weaker job growth is evident across most industries and company sizes,” said Mark Zandi, chief economist of Moody’s Analytics, which prepares the report using ADP’s data.
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