Daily News 7/30/2015
July 30, 2015
Thursday – July 30
U.S. economic growth rebounded in the second quarter of this year, led by a rise in consumer spending along with an increase in exports. The Bureau of Labor Statistics reported that Gross Domestic Product, the total value of goods and services produced in the U.S., rose by 2.3%, well above the anemic 0.6% recorded in the first quarter, which was revised from -0.2%. On the negative side, business spending declined during the quarter, led lower by decreasing spending on buildings and plants, while inventories also fell. In addition, the report revealed that inflation remained subdued.
Mortgage rates declined this week slipping just under 4% in a survey out from Freddie Mac. The 30-year fixed conventional rate ($417,00 or less) fell to 3.98% this week from the 4.04% recorded in the previous week. To obtain that rate, a potential borrower would have to pay 0.6 in points and fees. The recent decline in global Stock markets caused a flight to quality into the Bond markets, which drove prices higher and yields lower, and in turn, pressured mortgage rates lower.
The Federal Reserve released its monetary policy statement yesterday leaving interest rates unchanged, which left investors scratching their heads as to the timing of the first rate hike. The statement read that that both the labor market and the housing sector were improving, while inflation continues to run below its long-run objective. There was no hint as to when the first rate hike may take place. The interest rate in question is the short-term Fed Funds Rate, the rate in which banks lend their balances to other banks overnight. The Fed Funds Rate has been at 0.25% since late 2008.