Cautious to Raise Fed Funds Rate, Jobless Claims, Jobs Report

March 31, 2016

Thursday – March 31

Freddie Mac reported on Thursday that mortgage rates were unchanged this week and remain just above all-time lows. Earlier in the week, Fed Chair Janet Yellen indicated that the central bank should move cautiously in raising the short-term Fed Funds Rate. The 30-year fixed conventional mortgage rate ($417,000 or less) remained steady at 3.71% with 0.5 paid in points and fees. Last year at this time the rate was 3.70%.

Americans filing for first-time unemployment benefits rose this week, but still remain below the 300,000 mark for the longest stretch not seen the early 1970s. Weekly Initial Jobless Claims rose 11,000 in the latest week to 276,000, above the 265,000 expected. The labor market continues to strengthen, easing fears of the U.S. heading into a recession, though wage gains have been dismal. The four-week moving average of claims, which irons out seasonal abnormalities, rose 3,500 to 263,250.

The closely watched Jobs Report for March will be released by the Bureau of Labor Statistics on Friday morning and will be scrutinized by traders and investors around the globe. It is expected that employers added 200,000 new workers in March, which would be below the 242,000 created in February. Within the report it should show that the Unemployment Rate held steady at 4.9%, the lowest level since late 2008.

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Interest Rate Hike Cautious approach, Private Payrolls, Loan Application Volume fell

March 30, 2016

Wednesday – March 30

Federal Reserve Chair Janet Yellen spoke at the Economic Club of New York yesterday regarding on monetary policy here in the U.S. Ms. Yellen said that given the weak global economy and low inflation in the U.S., the Fed will take a cautious approach to raising interest rates in 2016. Ms. Yellen did say that if economic activity strengthens, the central bank “could readily raise rates to stabilize the economy.” Her remarks sparked a rally in global Stock markets which has continued here in the U.S. on Wednesday.

In the first of two job related reports this week, ADP reported that private payrolls in March rose 200,000, just above the 196,000 expected. February was revised lower to 205,000 from 214,000. The data comes ahead of Friday’s government Jobs Report for March. Despite a weak global economy, U.S. job creation continues to add jobs at a robust pace. ADP said, small businesses added 86,000 jobs; midsize ones, 75,000, and large companies, 39,000.

The Mortgage Bankers Association (MBA) reports that its Market Composite Index, a measure of total mortgage loan application volume, fell 1% in the latest week. The data comes despite low mortgage rates and an uptick in eligible borrowers. The refinance index decreased 3% from the previous week and now makes up 52.4% of total applications. The MBA went on to say that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) slightly increased to 3.94% from 3.93%.

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Low Inventory, Q1 2016 GDP, Consumer Confidence

March 29, 2016

Tuesday – March 29

The January Case-Shiller 20-city Home Price Index rose 5.7% year-over-year, in line with estimates and matching December’s 5.7% gain. Prices were up 0.8% month-over-month. The low inventory of homes available for sale has been the key reason for price growth, while low mortgage rates and a steady labor market are fueling demand. San Francisco, Seattle and Portland registered the largest gains year-over-year.

In central bank news, yesterday, the Atlanta Federal Reserve Bank reported that its forecast for Q1 2016 Gross Domestic Product will be a meager 0.6% and comes after yesterday’s disappointing Personal Income and Spending data. The dismal 0.6% growth forecast is down from the faster pace of 2.3% originally projected. On the flip side, San Francisco Fed President John Williams says the U.S. economy remains on track for gradual rate increases, and fears over the impact of a slowing global economy are overdone.

The Conference Board reported on Tuesday that March Consumer Confidence rose to 96.2 from the 94.0 recorded in February. The uptick was due to consumers feeling more optimistic as a result of the stabilization in the U.S. Stock markets. The survey went on to say that consumers do not see any big improvements in the economy, but also don’t see it getting any worse. In addition, consumers’ outlooks for the labor market were more favorable.

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PCE Rose, Personal Incomes Rose, Pending Home Sales Up

March 28, 2016

Monday – March 28

Inflation pressures remained tepid in February as measured by the Core Personal Consumption Expenditures (PCE). The Core PCE rose just 0.1% month-over-month in February, below the 0.2% expected and down from the 0.3% recorded in January. The Core PCE, which excludes food and energy, measures prices paid by consumers for goods and services to reveal underlying inflation trends. The Core PCE year-over-year, which is the Fed’s favored inflation gauge, rose 1.7%, which is below the 2% targeted by the Federal Reserve.

The Commerce Department also reported today that Personal Incomes rose 0.2% in February, reflecting a 0.1% decline in wages and salaries. Personal Spending rose slightly by 0.1% as consumers cut back on purchases in February. Consumer spending makes up about two-thirds of U.S. economic activity. Due to spending easing behind an uptick in income growth, the savings rate rose to its highest level in more than three years.

Over in the housing sector, February Pending Homes Sales surged 3.5% from January to its highest level in seven months, after a 3% decline in January. A spokesperson from the National Association of REALTORS® , which reports the data, said, “After some volatility this winter, the latest data is encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year1 and a modest, seasonal uptick in inventory.”

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Mortgage Rates, Unemployment Benefits, Easter

March 24, 2016

Thursday – March 24

Mortgage rates continued to hover just above all-time lows this week, as reported by government sponsored agency Freddie Mac. The average fixed rate 30-year mortgage edged lower to 3.71% form 3.73% with an average point of 0.5. Last year this time the rate was 3.69%. The recent decision by the Federal Reserve to maintain the current level of the Fed Funds Rate helped to keep mortgage rates steady.

Americans filing for first-time unemployment benefits rose this week, but still remain below the 300,000 mark for the longest stretch not seen the the early 1970s. Weekly Initial Jobless Claims rose 6,000 in the latest week to 265,000, near inline with estimates. The labor market continues to strengthen easing fears of a U.S. is heading into a recession. A Labor Department analyst said there were no special factors influencing last week’s claims data and no states had been estimated.

On the softer side, with Easter this weekend, here are a few facts to chew on. The average American will spend $146 on fashion, food, candy and other Easter stuff like baskets, with total spending expected to hit $16.8 billion. The number of eggs purchased in March, 2.6 billion. There are nearly 90 million chocolate bunnies produced each year. Americans will buy more than 700 million marshmallow peeps, making peeps the most popular non-chocolate Easter candy. The percentage of parents who steal from their children’s Easter baskets, 81%. When taking a bite into a chocolate bunny, 76% of Americans prefer to bite off the ears first, 5% eat the feet first and 4% eat the tail first.

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New Homes Sales Jan-Feb, Mortgage Applications down, US Capital Markets

March 23, 2016

Wednesday – March 23

The Commerce Department reported on Wednesday that February New Home Sales rose 2% from January to an annual rate of 512,000 units, near the 511,000 expected. However, sales are down 6.1% from February 2015. The median sales price rose 6.2% from January to $301,400. Inventories of new homes have been running on the low side with just 5.6 months’ worth of supply. Many economists see a pent-up demand for housing and just recently the National Association of REALTORS® stated the need for more construction to ease supply constraints. New Home Sales measures sales of newly built homes and includes both quantity and price statistics.

Despite the spring buying season being right around the corner, total mortgage application volume declined for the second straight week. The Mortgage Bankers Association reports that its Market Composite Index, a measure of total mortgage application volume, fell 3.3% in the latest week. The refinance index fell 5%, while the purchase index declined by 1% from a week earlier. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.93% from 3.94%, with points decreasing to 0.35 from 0.42.

U.S. capital markets are gearing up for an extended holiday break ahead of Easter Sunday. U.S. capital markets will be closed on Friday in observance of Good Friday. The Bond markets will close at 2:00 p.m. ET on Thursday and are closed on Friday. In Canada, the Toronto Stock Exchange will also be closed, while those markets in Europe and Asia will be closed on Friday as well as Monday March 28.

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Home Prices, Zillow, Brussels Explosions

March 22, 2016

Tuesday – March 22

The Federal Housing Finance Agency reported on Tuesday that home prices rose 0.5% in January from the previous month on information from mortgages sold to, or guaranteed by Fannie Mae and Freddie Mac. Lower inventory of homes coupled with rising demand are a few of the factors behind price appreciation. From January 2015 to January 2016, prices were up 6.0%.

So when is the best time to list your home for sale? Stan Humphries, chief economist at Zillow, an online real estate data base company, say that it’s early May. The reasoning is that with inventories being tight and with a lot of homebuyers putting in multiple offers, it is extending the spring selling season. Zillow went on to say that buyers later in the season are more eager to buy because they have been frustrated with earlier offers, so they may tend to pay a higher price to purchase a new home.

Two deadly explosions rocked the city of Brussels in Belgium early on Tuesday morning, targeting its main airport of Zaventem and the city’s metro system. At least 31 people have been confirmed dead with the death toll rising. Responsibility for the horrific attacks have not yet been claimed. In the airport, a suicide bomber was the cause behind that blast.

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Existing Home Sales, Gas Prices, Jobs

March 21, 2016

Monday – March 21

After hitting six-month highs in January, February Existing Home Sales slipped by 7.1% from the previous month to an annual rate of 5.08 million, below the 5.37 million expected. The National Association of REALTORS® (NAR) said that a low supply of existing homes and steady price growth were the reasons behind the decline. Sales are up 2.2% from February 2015. Existing Home Sales are completed transactions that include single-family homes, townhomes, condominiums and co-ops. Lawrence Yun, NAR chief economist said, “The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings. However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”

Gas prices continue to rise around the country due to higher prices for the price of oil, after the price went from $26 a barrel in mid-February to the current $40. That works out to be a rise of about $0.33 a gallon, says Tom Kloza, analyst for the Oil Price Information Service. The national average price for a regular gallon of gasoline hit $1.98 on Monday, up from $1.71 a month ago. In addition, the demand for gasoline is increasing as more drivers take to the roads for spring and summer.

The Labor Department reported last week that the number of people that were hired into a new job and those quitting their current jobs both declined in January. This signals that although the labor market has dramatically improved from the low levels seen during the Great recession at the end of 2008 and into 2009, it has yet to come back to full employment. The data from the Job Openings and Labor Turnover Survey or Jolts showed that 5 million people were hired in January, down from 5.4 million in December. The number of people quitting their jobs declined to 2.8 million from 3.1 million.

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