The National Debt is currently: $19,237,639,132,587.00 is Higher by another 40 BILLION in the last week. The interest pay-out alone on the debt is 233 Billion per year! I post this so we will be aware of what we are leaving to our children.
Rising oil prices buoyed stocks Friday, but major U.S. indexes still ended a rocky week in the red. Stocks around the globe declined this week, as worries resurfaced about the ability of central bankers to lift a sluggish global economy after years of easy monetary policy. It marks the second week of declines in three weeks for major U.S. stock indexes.
The Dow closed higher by 30 points at 17,576. The S&P 500 closed at 2,047. Gold is trading at $1,240 an ounce, while oil futures at $39.66 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.43/Gal. Summer gas (higher priced) is in production.
The FNMA 30-year fixed 3.0% coupon (interest rates at which banks sell their loans into Fannie Mae), containing 3.25% – 3.625% mortgage rates, the benchmark or how rate sheets are priced these days is currently trading at 102.97 which is the highest it’s been since Feb 11th 2016. Prior to that you would have to go bake to Jan 2015. Our current trading range is about 101.50 to about 102.8. Each .50 change in the price of the security translates to about 0.125 in rate. Basically the 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 lower the rate.
The Fed “All Stars” if you will, got together this week for a little pow-wow. Janet Yellen and three former Fed leaders sought to “dispel” worries the U.S. is heading back toward recession despite concerns about slow global growth and the expansion’s advancing age. Ms. Yellen, joined Thursday in an unusual gathering in New York by former Fed Chairmen Ben Bernanke, Alan Greenspan and Paul Volcker, described an economy that is progressing without breeding obvious new financial bubbles that could derail growth.
Mr. Bernanke stated: “The domestic U.S. economy is moving forward, and I don’t see any particular reason to believe a recession is any more likely in 2016 than it was in 2015 or 2014.” Though the U.S. expansion is already older than the average post World War II expansion, he said expansions don’t die of old age. Instead, they reverse when imbalances throw off spending and investment. Messrs. Greenspan and Volcker largely concurred.
Taken altogether, their comments marked a sign of guarded confidence from a quartet of the world’s most powerful economic policy makers, past and present, at a moment with political undertones. Republican presidential front-runner Donald Trump has argued the U.S. is a bubble economy heading toward severe recession. The Fed’s own critics (including myself) have argued its low interest rate policies and repeated bond-purchase programs have inflated financial asset prices and made them prone to decline.
The Fed took extraordinary measures during and after the 2007-2009 financial crisis, including bailouts of banks and the giant insurer American International Group Inc., along with bond-purchase programs that have swelled its portfolio of assets. Politicians have demanded more openness on the part of the Fed and questioned the bank bailouts, putting it in a long-running battle to restore public trust in its conduct and role in the economy.
In economic news this week; According to the minutes of the last Fed meeting, the Fed Gods are apparently split regarding inflation pressures. Factory orders fell. The U.S. trade deficit widened. And companies reduced the number of job openings but hired more aggressively in February.
Federal Reserve officials seemed evenly split at their March meeting on the key question of whether the recent pickup in core inflation would prove persistent, according to minutes of the meeting released Wednesday. So-called core inflation refers to prices excluding gasoline and food. While the Fed targets inflation with those baked in, it looks to the core measure of inflation as a gauge of where prices will be in the future. And the core PCE price index has risen substantially in recent months.
“Some” Fed officials saw the increase as consistent with a firming trend on inflation. At the same time, “some” others expressed the view that the increase in price pressures were unlikely to be sustained. Fed officials want to see inflation strengthen to its longer-run 2% target. Inflation running below that level suggests an economy that could easily get stuck in sub-par growth.
The Fed is more worried that the gains in inflation would be fleeting said the recent gains appeared to reflect “increases in prices that had been relatively volatile in the past.” They appeared reluctant to lift interest rates at their next meeting, which takes place at the end of this month. “Several” Fed officials noted their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate,” the minutes said. At the same time, “some” other Fed officials spoke in favor of an April rate hike. The Fed’s next policy meeting is April 26-27. Before the minutes were released, traders saw a very slim chance of a rate hike then and only see one rate hike all year, according to the CME FedWatch tool.
Factory orders fell sharply in February, after a collapse in bookings for oil equipment and planes. Factory orders fell 1.7%, the Commerce Department said Monday, marking the third fall in four months. Orders for durable goods were revised to show a 3% decline instead of the previously reported 2.8% fall. Orders for equipment in the hard-hit mining, oil field and gas field machinery segment dropped by 20.1%. Those for nondefense aircraft dropped by 27.2%, and for defense aircraft by 28%. Shipments fell 0.7%, the tenth drop in 11 months. Inventories fell 0.4%, the eighth straight monthly decline.
The U.S. trade deficit widened 2.6% in February largely because of a rise in imports, marking the third increase in a row and the biggest gap since the end of last summer.
Americans added to their debt at a steady solid pace in February, suggesting that consumer spending will continue to prop up the economy. Consumer credit grew at an annual rate of 5.8%, for a gain of $17.2 billion, in February, the Federal Reserve said Thursday. The gain was above market expectations of a $14 billion gain. Consumer credit has been consistently solid over the past year with no monthly gains below 5%. Total consumer borrowing, which does not include mortgage debt, is now $3.57 trillion. Credit growth in January was revised up sharply, to a $14.9 billion gain from the prior estimate of $10.5 billion.
On the Employment front: Companies reduced the number of job openings but hired more aggressively in February, according to data released Tuesday. The number of job openings fell to 5.45 million from 5.6 million in January, the Labor Department reported. That’s still the second highest level since July. The job openings survey, known by its JOLTS acronym, covers the labor market with a one-month lag to the payrolls report.
As reported last Friday, the U.S. reported 215,000 new jobs in March in another show of strength for the economy. The steady of pace of hiring is likely to reassure the Federal Reserve that the economy remains on sound footing, laying the groundwork for another increase in interest rates as early as June. We have been creating more than 200,000 jobs a month since 2014.
The unemployment rate, meanwhile, rose a notch to 5% from 4.9%, but that was because more Americans joined the labor force, the Labor Department said Friday. The size of the labor force has increased by 2 million people in the past five months, a clear sign work is easier to find. “The increase in the unemployment rate came not because of fewer people working, but because more people were looking for jobs.
If you like this commentary please visit and “Like” my Facebook page. I put all of my prospective buyers through underwriting so that when they place their offer, it is as close to “cash” as you can get. So to get your clients “underwriter approved”, please contact me and get your offer accepted!
I have a personal App for your phone that replaces my business card. You can contact me (various formats), run the mortgage calculator, get RE/Mortgage news, and have access to my social media sites including this weekly commentary. You can even share my app with others. Please check it out and let me know what you think. Click on the following link from your phone and hit “add to home screen, then click “add” and you’re done.
Bill’s phone App: https://bbartok.mortgagemapp.com/
Mortgage Advisor MLO# 445991
The nicest compliment I can receive is the referral of your family, friends and co-workers.