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National Market Update for week of August 5th

Monday, August 5, 2019   /   by Teresa McCormick

National Market Update for week of August 5th

FOR THE WEEK OF AUGUST 5, 2019

 
 
YOUR WEEKLY SMILE
 
 

Flying? I've been to almost as many places as my luggage! --Bob Hope, American comedian

 
 
 
 
NATIONAL MARKET UPDATE
 
 
 

The National Association of Realtors (NAR) reported their Pending Home Sales index of contracts signed on existing homes spiked 2.8% in June, landing up 1.6% year-over-year, ending 17-months of annual declines.

The NAR's chief economist sees a positive trend: "Job growth is doing well, the stock market is near an all-time high and home values are consistently increasing... combined with the incredible low mortgage rates..."

Last week's Fed rate cut won't directly affect mortgage rates, but it should boost housing inventory. One home builder said lower rates will make construction "more affordable at a time when labor and material costs are increasing."

 
 
 
 
REVIEW OF LAST WEEK
 
 
 

RATES DOWN, JOBS UP, STOCKS FALL?... The Fed cut rates, we got more jobs in July, yet stocks took their worst weekly dive since December? Yup! Investors worried about higher tariffs on China and a slowing global economy.  

Hey, the Fed cited "global developments" that threaten "the economic outlook" as a reason to cut rates to help the economy, even though "economic activity has been rising" and "the labor market remains strong." Go figure.

Yes, folks, that labor market is strong, with 164,000 jobs added in July, hourly earnings up 3.2% from a year ago, and unemployment steady at 3.7%, even with 370,000 more people in the labor force. 

The week ended with the Dow down 2.6%, to 26485; the S&P 500 down 3.1%, to 2932; and the Nasdaq down 3.9%, to 8004.

With stocks and the Fed rate falling, bonds naturally rose. The 30YR FNMA 4.0% bond went UP .22, to $103.72. In Freddie Mac's Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate matched last week's, near a three-year low. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... Freddie Mac's chief economist expects "stronger housing starts and increased home sales for the remainder of the year as homebuyers benefit from very attractive mortgage rates, lower prices at the gas pump, plus a gradual bump up in wages."

 
 
 
 
THIS WEEK'S FORECAST
 
 
 

SERVICE ECONOMY GROWS, WHOLESALE INFLATION NOT SO MUCH... The ISM Non-Manufacturing Index should show solid growth, important for the service sector of our economy that generates the overwhelming majority of our jobs. The Producer Price Index (PPI) forecast has wholesale price inflation up a smidge. 

NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.

 
 
 
 
FEDERAL RESERVE WATCH
 
 
 

Forecasting Federal Reserve policy changes in coming months... Now that the Fed made its quarter percent rate cut last week, everyone sees another quarter percent dip in September, with many expecting one more in October. Note: In the lower chart, a 97% probability of change is only a 3% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

AFTER FOMC MEETING ON: CONSENSUS
Sep 18  1.75%-2.00%
Oct 30  1.50%-1.75%
Dec 11 1.50%-1.75%

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Sep 18     97%
Oct 30    59%
Dec 11    50%
 
 
 
 
 
BUSINESS TIP OF THE WEEK
 
 

Try not to "post and ghost" on social media. When people comment on your post, take the opportunity to build a relationship. Get them into a conversation and send them a request to connect.

 
 
  Kate Anemone
Kate Anemone
Loan Originator 
NMLS# 1739543
5940 S. Rainbow Blvd., Suite 3006
Las Vegas, NV 89117
Phone: 702-533-5713
Fax: 209-578-9001
Cell: 702-533-5713
kanemone@cornerstone.us.com
https://www.cornerstonemortgageonline.com/kanemone/
 

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