The National Debt is currently: $17,526,993,132,952.00 is higher by about 23 BILLION. That’s 50 Billion increase in just 2 weeks. I post this so we will be aware of what we are leaving the next generation.
The Dow last traded at 16,341 about 275 pts. higher than where it was last Friday. The S&P 500 is trading at 1,870. Gold is trading at $1,335 an ounce, while oil futures at $99.48 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.65/Gal.
Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. The FNMA 30-year fixed 4.0% coupon, containing 4.25% – 4.625% mortgages, pretty much the benchmark or how rate sheets are priced these days is currently trading at 104.38 about .60 worse 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 limp along at a snails pace with manufacturing and Industrial production showing signs of improvement. Inflation is still in check and the new Fed Chairwoman commits a major faux pas in tilling the market what she really thinks.
An index of manufacturing conditions in the New York region showed modest improvement in March after a sharp drop in the prior month. The Empire State’s general conditions index rose to 5.6 in March from 4.5 in February. The index had fallen by 8 points in February, a drop attributed to severe winter weather. The Empire State index is often the first of several regional manufacturing gauges to be released. They can frequently be volatile from month to month, but taken together they present one of the timeliest reads on a critically cyclical sector.
Industrial production climbed 0.6% in February, the Fed reported earlier this week, the fastest monthly growth rate since August as output recovered after the unusually rough weather to start the year.
Consumer prices rose slightly, 0.1%, in February mostly because of higher food and housing costs, but overall inflation remained quiet. The price of food jumped 0.4%, the largest gain since September 2011, because of higher costs of meat, poultry, fish, dairy and vegetables. Yet while food prices have only risen 1.4% over the past year, they are likely to increase in the coming months because of the drought we’re experiencing here in California and unusually cold weather in other parts of the country. By some estimates, food prices at grocery stores could rise 3% or more in 2014 and give a sharp pinch to consumers.
Excluding food and energy, so-called core consumer prices also rose 0.1% in February. Housing costs, the biggest expense for most consumers, advanced 0.2%. Prices also rose for medical care and airline tickets. The core rate is viewed by the Fed Gods as a more useful gauge of underlying inflationary trends. Over the past 12 months, the core rate of inflation has risen just 1.6%, well below the Fed’s limit for inflation.
The Federal Reserve met on Wednesday and scaled back its bond-buying stimulus strategy again and tried new ways to signal to markets that it will keep short-term interest rates low for a long time, but the Fed Gods also rattled financial markets by suggesting in a few ways that rates could rise a bit earlier and faster than investors had expected. Although the new approach still means the first rate hike since 2006 won’t take place until next year. For the text of the FOMC decision click on the link. For a great synopsis of the Feds actions and guidance since December 2008, click here.
At its meeting, the Fed dropped its 6.5% unemployment-rate target for the first rate hike and said it would look at a “wide range” of factors, including inflation levels and job creation, before charting out a new path. They basically took out any numerical thresholds and are going to look at everything.
Following the Feds meeting Yellen spoke for an hour and the market heard but three words; “around six months.” One glitch that got people talking was when Yellen was a little too specific: Answering a question about how long the Fed might wait to raise interest rates after the Fed stopped its post-financial crisis policy of buying bonds to hold rates down, she committed the ultimate Washington gaffe — she said what she apparently meant. “About six months,” she said… and the Markets immediately sold off. Before this Fed meeting, the market had been expecting the first rate hike to come toward the end of 2015, perhaps in October or December. Now we’ve heard from the Fed chair that the first hike could, (emphasize could), come two or three meetings before that. Anyone remember Alan Greenspan?
On the Real Estate front: The National Association of Home Builders/Wells Fargo housing-market index, a gauge of confidence among home builders, rose one point to 47 in March, but remains close to the lowest level since May and signals that builders, generally, are pessimistic about sales trends. rose this month. March is the second consecutive month that the index has been below a key reading of 50 (readings under 50 signal that builders, generally, are pessimistic). The builder-confidence gauge hit a recent peak of 58 in August, which was the highest level since 2005.
Construction on new homes fell slightly in February, but in a sign that work will pick up as the weather warms, builders filed more permits to start new projects such as multi-unit condominiums and apartment buildings. Permits reflect how many new homes companies plan to build in the near future. The rise in permits signals that builders plan to ramp up construction as warm weather arrives. Single-family homes account for about three-quarters of the housing market. Many prospective buyers are opting for previously owned homes, however, which tend to be less expensive than new properties. But even sales of existing homes have fallen sharply over the past six months.
Sales of existing homes were down 0.4% in February, the National Association of Realtors reported. Sales rates have trended down since the summer as rising mortgage rates and home prices cut affordability. Constrained inventory and unusually poor weather may have also played a role in weak buying, the trade group said. First-time buyers have had a particularly tough time in this housing market, making up just 28% of existing-home sales last month, compared with a long-term average of 40%. Locally there have been 156 new listings in the El Dorado Hills/Placerville area in the last 30 days.
On the Employment front: Applications for unemployment benefits rose in the second week of March, but remain near the lowest level since the end of the recession almost five years ago. Initial jobless claims climbed by 5,000 to a seasonally adjusted 320,000 in the period of March 9 to March 15. The number of people seeking benefits each week is seen as a good gauge of how many layoffs are occurring in the economy. The latest claims report took place during the survey week used by Labor to calculate monthly employment growth for March, suggesting that job creation could end higher compared to the first two months of the year. A lower claims figure typically correlates with higher monthly job growth.
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