Stocks close the week with big gains – Minutes from the Federal Reserve’s September meeting released this week made investors feel that the Fed’s first rate rise since 2006 will not happen this year. The notes revealed that The Fed is worried about unusually low inflation, spill over from slowing in China, and unusually low wage growth. They also said that the economy was still growing. The September jobs report showed job growth around 140,000 jobs a month for the last 2 months, after averaging 212,000 new jobs monthly for the first 7 months of the year. That slowdown also caused investors to expect that The Fed will not raise rates in the next couple of months as previously expected. Higher interest rates mean higher borrowing costs which cut into corporate profits, so continued low rates were seen as positive by investors. Oil prices also rose this week on fears of Russia’s involvement in Syria. Low oil prices have hurt the energy sector, so energy stocks rose on higher oil prices. The dollar which has been strong this year and has caused U.S. goods to be more expensive overseas and overseas goods to be less expensive here in the U.S. also weakened this week. This was helpful as exports have suffered as a result of the strong dollar and slowing economies overseas. The Dow Jones Industrial Average closed the week at 17,084.49, up from last week’s close of 16,472.37. The S&P 500 closed the week at 2,014.89, up from last Friday’s close of 1,951.36. The NASDAQ closed the week at 4,830.47, up from last week’s close of 4,707.78.
Treasury bonds rise from last week’s lows – The 10 year Treasury bond yield closed week at 2.12%, up from 1.99% last Friday. The 30 year treasury bond yield closed Friday at 2.94%, up from last week’s close of 2.82%. Bond yields follow stocks as money moves. Often when investors sell stocks on fears in the stock market they buy bonds which are safe but offer a low return. This week they bought stocks and sold bonds which drove bond yields higher.
Mortgage rates rise from last week’s lows of the year – The 30 year fixed rates are around 3..875% for loans up to $417,000, and around 4.00% for loans over $417,000. The 15 year fixed rate loans are about 3.20% for loans up to $417,000, higher loan amounts have rates that are around 3.375%. 5-Year-ARM and 3–Year ARM rates are both around 3.00%.
September sales data will be released later in the month. It will be interesting to see how prices and sales numbers are holding up. Stay tuned!
Have a great weekend!
Mortgage rates rose this week as positive data indicates that the economy is improving at a surprisingly strong pace. All indicators were positive beyond expectations again this week. Today marked the first day the DOW didn’t finish up after 10 straight days. The stock market rallied at the close and we almost hit 11 positive days in a row, unbelievable! Retail sales, jobs, housing, financials, posted better than expected results. Inflation results showed inflation higher than expected. Usually inflation causes rates to rise, which they did but more slightly than expected. The dollar also strengthened against most currencies which was also surprising. Rates on 30-year fixed-rate mortgages averaged 3.63 percent for the week ending March 14, up from 3.52 percent last week but down from 3.92 percent a year ago. Rates on 30-year fixed-rate loans hit a low in Freddie Mac records dating to 1971 of 3.31 percent during the week ending Nov. 21, 2012. For 15-year fixed-rate mortgages, rates averaged 2.79 percent, up from 2.76 percent last week but down from 3.16 percent a year ago. Rates on 15-year fixed-rate loans hit a low in Freddie Mac records dating to 1991 of 2.63 percent during the week ending Nov. 21, 2012. For five-year Treasury-indexed hybrid-rate mortgage (ARM) loans, rates averaged 2.61 percent, down from 2.63 percent last week and 2.83 percent a year ago. Rates on one-year Treasury-indexed ARM loans averaged 2.64 percent, virtually unchanged from 2.63 percent last week, but down from 2.79 percent a year ago.
Inventory rates (homes for sale) are the lowest ever recorded. So for now its more of the same: multiple offers, rising prices, few homes to show and quick decisions on the part of buyers is a must! It should be noted that even though stocks are higher that the highs in 2007 adjusted for inflation, in “real” numbers they are quite a bit lower. Housing as well. Some areas have hit the highs from 2007, but adjusted for inflation they are still lower in “real” dollars. I would think that prices will continue to move up sharply before they level off!