The Weekly Rap! Friday Jan 10th, 2014

The National Debt is currently: $17,321,617,425,675.00  higher by about 10 BILLION.  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,386 about even from last week.  The S&P 500 is trading at 1,833.  Gold is trading at $1,243 an ounce, while oil futures at $92.46 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.35/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.88%.  30-year Treasury Bond yields last traded at 3.81%.  Rates on 30-year fixed-rate mortgages are about 4.625% 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 99.96 about 0.50 Pt better 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 continues to crawl forward.  I think the snail might win.  The employment numbers were disappointing with fewer jobs being created than anticipated.  Our trade gap tightened which is good news and we got to see what the Fed Gods said at their last meeting.

The Institute for Supply Management reported that its “services” index for December slowed slightly to 53% from 53.9% in November. The “new-orders” index fell 7 points to a reading of 49.4%, which was the first contraction since July 2009.  Any reading above 50% indicates expansion.  As you can see we’re barely expanding.

New orders for goods produced in U.S. factories were higher by 1.8% in November, the Commerce Department reported.  Orders for durable goods – products meant to last at least three years – advanced 3.4% in November. Orders for nondurable goods increased 0.8%.

The U.S. trade deficit sank nearly 13% to $34.3 billion in November from $39.3 billion in October.  The sharp decline in the deficit in November likely means the economy grew faster in the fourth quarter than was expected.  A smaller trade deficit means the U.S. is selling more goods overseas and buying less from foreign countries.

On the Consumer credit side credit grew at annual rate of 4.8% in November, representing a gain of $12.32 billion.  That’s the smallest percentage gain since April.  Revolving credit like credit cards grew just 0.6% after a 5.6% advance in October.  Non-revolving credit like auto and student loans meanwhile grew 6.4%, which still is the slowest rate of growth since May.

The Fed Gods agreed in December to start to wind down their asset purchase program as most believed that the benefits of the controversial policy were eroding over time.  The Minutes from the Dec. 17-18 meeting included the results of a survey of officials about the costs and benefits of the program, commonly called quantitative easing.

The survey found that “a majority of participants judged that the marginal efficacy of purchases was likely declining as purchases continue.” In other words, most of the  Fed Gods think the central bank can conclude the bond purchases in the second half of the year. At the December meeting, the Fed agreed to begin to taper its bond-purchase program by $10 billion to $75 billion per month starting in January. Fed officials expressed greater confidence in the economic outlook. They said that future reductions would be undertaken in measured steps.

On the Real Estate front: In our local area (El Dorado Hills, Cameron Park, Shingle Springs, and Placerville) the last month ending December 13th current listings have dropped almost 12% from November, but for the year were up 44%.  This is likely due to many not wanting to list in December and the hectic holiday season.  The average home price was higher by 17% for the year, but has been at a level pace since June.  Average sale price as a percent of original list price is running about 95%.

On the Employment front:  The U.S. added just 74,000 jobs in December to mark the smallest gain in three years, a disappointing number likely influenced by poor weather.  At least that’s what the economites are blaming the poor report on.  Yet the weaker pace of hiring could also be a sign of slowing momentum in the up-and-down economy as it entered 2014.

The unemployment rate fell three ticks last month to 6.7%, the first time it’s dropped below 7% in 60 months. The decline mainly occurred because more people dropped out of the labor force, however. Read: decline in labor force.   Some 347,000 Americans stopped looking for work last month and the size of the labor force actually shrank in 2013, a sour note in a year where the economy added a robust 2.19 million jobs. The U.S. has created around 2 million jobs for three straight years, though the unemployment rate still remains abnormally high by historical standards.

You can visit my corporate website at: http://bill.bartok.stanfordloans.com
Sincerely,

Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

 

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