Market Update January

Dated: 01/04/2016

Views: 351

Danyal Erickson
Mortgage Loan Originator
NMLS# 1299942
1517 N. Ankeny Blvd, Ste. A
Ankeny, IA 50023
Cell: (515) 491-6861
Office: (515) 965-1707
Fax: (844) 289-7133
derickson@stearns.com
danyalshomeloans.com
For the week of January 4, 2016 – Vol. 14, Issue 1
Happy New Year!

>> Market Update 

QUOTE OF THE WEEK... "I think in terms of the day's resolutions, not the year's." --Henry Moore, English sculptor and artist

INFO THAT HITS US WHERE WE LIVE ... To stay focused on the day is a pretty useful piece of advice, since that's where progress is made. Progress, however, seemed elusive in last week's Pending Home Sales number, which declined slightly in November. Yet this National Association of Realtors (NAR) index of contracts signed on existing homes was still a decent 2.7% ahead of where it was a year ago. Plus, we've now seen year-over-year gains in pending home sales for 15 months in a row.True, there's been a modestly slowing trend since the index peaked at a nine-year high last May, but the housing market remains constrained by tight inventory levels in many areas.
The Case-Shiller Home Price Index posted a 5.2% annual bump in October. But some feel that price appreciation is stabilizing. The chief economist at a listing site noted, "The U.S. housing market as a whole made great progress in 2015...to a more stable and sustainable environment." Freddie Mac's Multi-Indicator Market Index (MiMi) posted its best annual gain in a year and a half. Their deputy chief economist predicts for 2016: "While mortgage rates will rise modestly, they will still remain at historically low levels. Combined with stronger job and income growth, the net result may be strong growth in household formation, construction, and home sales."
BUSINESS TIP OF THE WEEK... Always try to exceed expectations with clients. Put their needs and goals above all others, then do everything you can do to help reach them. 

>> Review of Last Week

2015 ENDS WITH A WHIMPER... Thursday saw stock prices dip on the year's last day of trading. This left all three major stock market indexes down for the week, with two of them down for the year.The blue chip Dow Jones Industrial Average and the broadly-based S&P 500 Index both ended lower for 2015. The Dow dipped 2.2% for the year, its first annual loss since 2008. The S&P 500, which was up for the year by a handful of points on Wednesday, got beaten back the next day to end with a 0.7% loss for 2015. But the tech-heavy Nasdaq Composite Index finished nicely ahead for the fourth year in a row, registering a decent, if not spectacular, 5.73% annual hike. 
Investors should have been more upbeat. December Consumer Confidence came in with a higher-than-anticipated boost to a 96.5 reading. Some analysts felt this reflected positive consumer response to a stronger labor market and lower gasoline prices. But other reports weren't so rosy. The Chicago PMI measure of Midwest manufacturing activity sank to its lowest level since July 2009. At 42.9, it was well below the 50 reading, indicating solid contraction. Weekly Initial Unemployment Claims went up an unexpected 20,000 filings, but they remain below 300,000, which satisfies most economists. The four-week moving average only went up by 4,500, coming in at  277,000.
The week ended with the Dow down 0.7%, to 17425; the S&P 500 down 0.8%, to 2044; and the Nasdaq down 0.8%, to 5007. 
The end of the year saw investors playing it safe, shifting money into bonds, which bolstered prices. The 30YR FNMA 4.0% bond we watch finished the week up .28, at $105.84. National average fixed mortgage rates moved slightly ahead in Freddie Mac's Primary Mortgage Market Survey for the week ending December 31. Their chief economist feels this was due "...in part to strong consumer confidence in December." Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?... The 20,000 increase in new jobless claims for the week ending December 26 was the largest weekly hike since February.

>> This Week’s Forecast

PAYROLLS GAIN, FACTORY ACTIVITY SLIPS, BUT SERVICES GROWS... The first week of the new year always includes the prior month's Employment Report. We're expected to kick off 2016 with 200,000Nonfarm Payrolls added in December, the Unemployment Rate holding at 5.0%, and Hourly Earningsup again for the month, a good sign. Not so good is the ISM Index of manufacturing, predicted to show that sector contracting, though not as much as it had the prior month. But ISM Services is forecast to report continued growth for the sector that provides the overwhelming majority of U.S. jobs. 
>> The Week’s Economic Indicator Calendar Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. 
Economic Calendar for the Week of Jan 4 – Jan 8
 Date Time (ET) Release For Consensus Prior Impact
M
Jan 4
10:00 ISM Index Dec 49.0 48.6 HIGH
W
Jan 6
08:30 Trade Balance Nov -$44.7B -$43.9B Moderate
W
Jan 6
10:00 ISM Services Dec 56.4 55.9 Moderate
W
Jan 6
10:30 Crude Inventories 1/2 NA 2.629M Moderate
Th
Jan 7
08:30 Initial Unemployment Claims 1/2 NA 287K Moderate
Th
Jan 7
08:30 Continuing Unemployment Claims 12/26 NA 2.198M Moderate
F
Jan 8
08:30 Average Workweek Dec 34.5 34.5 HIGH
F
Jan 8
08:30 Hourly Earnings Dec 0.2% 0.2% HIGH
F
Jan 8
08:30 Nonfarm Payrolls Dec 200K 211K HIGH
F
Jan 8
08:30 Unemployment Rate Dec 5.0% 5.0% HIGH
                                                                                                           

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months... The Fed shouldn't move the Funds Rate in January, but more economists are saying it will go up a quarter point in both March and April. Note: In the lower chart, a 12% probability of change is an 88% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on: Consensus
Jan 27 0.25%-0.50%
Mar 16 0.50%-0.75%
Apr 27 0.75%-1.00%

Probability of change from current policy: 
      62% 
After FOMC meeting on: Consensus
Jan 27       12%
Mar 16       56%
Apr 27

This e-mail is an advertisement for Danyal Erickson. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in this message is the property of Stearns Lending, LLC and cannot be reproduced for any use without prior written consent. This message is intended for business professionals only and is not intended for distribution to consumers or other third parties. The material does not represent the opinion of Stearns Lending, LLC. This is not a commitment to lend. Program restrictions apply. Stearns Lending, LLC offers many loan products. Stearns Lending, LLC is a California Limited Liability Company headquartered at 4 Hutton Centre Drive, 10th Floor, Santa Ana, California 92707. (800) 350-LEND (5363) Company NMLS# 1854 (www.nmlsconsumeraccess.org). Stearns Lending, LLC is licensed, registered, or exempt from licensing to conduct business in the following states which require license disclosure on advertising materials: Arizona Mortgage Banker License #0905413; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act RMLA# 4130495; Georgia Residential Mortgage Licensee #24066; Illinois Residential Mortgage Licensee #MB.6760686; Kansas Licensed Mortgage Company #MC.0025047; Massachusetts Mortgage Lender/Broker License #MC1854; Licensed by the Mississippi Department of Banking and Consumer Finance; Missouri Residential Mortgage Loan Broker License #12-2052; Licensed by the New Hampshire Banking Department; Licensed by the N.J. Department of Banking and Insurance; Rhode Island Licensed Lender; Registered under Texas SML Mortgage Banker Registration; Virginia State Corporation Commission Lender/Broker License #MC-2184; Washington Consumer Loan Company License #CL-1854. For State of Nevada residents Stearns Lending, LLC is a mortgage lender promoting the loan products or services contained in this article; the business phone number that Stearns Lending maintains on file with the State of Nevada Department of Business and Industry is (714) 513-7777. This information is accurate as of July 24, 2015. © 2015 Stearns Lending, LLC All Rights Reserved. 

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