25 Living Rooms With Hardwood
Oct 13 2015 9890 1
>> Market UpdateQUOTE OF THE WEEK... "Life is really simple, but we insist on making it complicated." --Confucius, Chinese philosopher
INFO THAT HITS US WHERE WE LIVE... One of the more interesting reports last week was the Mortgage Bankers Association's Weekly Mortgage Applications Survey. It showed mortgage applications went up a spectacular 25.5% from the week before. Interestingly, this survey was for the week ending October 2, the day before the government's TRID rules for mortgage lenders went into effect. The new 1,888-page regulation is intended to make the mortgage process clearer to the borrower, a good thing. But it's also expected to lengthen the closing process, which is why many home buyers and refinancers raced to get their applications in before TRID went into effect.
All of us of course will work as efficiently as possible while complying with the new TRID requirements. In any case, the majority of Americans remain undaunted. Fannie Mae's September Home Purchase Sentiment Index went up 3 points in September, hitting 83.8. The share of respondents saying now is a good time to buy a home went up 1%, to 64%. And the share saying now is a good time to sell increased 5%, to 52%. The realtor.com "Advanced Read of September Trends" found that we've transitioned into a buyer's market. Their chief economist believes that buyers now "should find some relief with lower prices and less competition."
BUSINESS TIP OF THE WEEK... Successful people stay optimistic. They expect great things to happen every day, treat others as they like to be treated, don't waste time fighting things they can't change, and focus on the job at hand, not on the results they're shooting for.
>> Review of Last WeekONCE MORE, WITH FEELING... Wall Street investors had such a good time sending stocks higher the week before, they decided last week to do it again. Only this time they put some real gumption into it. The net result? The broadly-based S&P 500 logged its best weekly gain of the year, the Dow posted its best week since February, and the tech-heavy Nasdaq came in with a none-too-shabby 2.6% jump.These performances joined global equity market rallies ignited by rebounding commodity prices. Positive sentiments here received extra impetus when the Fed's last meeting minutes showed central bankers reluctant to raise interest rates due to global risk concerns.
All things economic, however, weren't exactly perfect. The modest amount of data we were exposed to delivered the typical mixed bag of messages. The ISM Services Index dropped from a very healthy 59.0 in August to an unexpected 56.9 in September. But we must remember that one month's data does not a trend make, plus 56.9 is solidly above 50, signaling expansion. Best part of the report was the employment index, which was up for the month. This is very nice to see in the services sector, which supplies around 80% of our jobs. Finally, the Trade Deficit in August ballooned up to $48.3 billion, as exports dipped while imports gained.
The week ended with the Dow UP 3.7%, to 17084; the S&P 500 UP 3.3%, to 2015; and the Nasdaq UP 2.6%, to 4830.
Bonds ended the week mixed, not bad in light of the strong rally in stocks. The 30YR FNMA 4.0% bond we watch finished the week down .06, at $106.21. Freddie Mac's Primary Mortgage Market Survey for the week ending October 8 showed national average fixed mortgage rates headed lower. Freddie's chief economist tied this to "a more than disappointing September jobs report." Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?...First time buyers are in fact coming back into the housing market. Recent data reported that the share of first time home buyers has moved up to 32%.
>> This Week’s ForecastRETAIL GROWS, INFLATION SLOWS... The experts expect to see September Retail Sales expand for another month. A good thing, since the consumer is such an important part of the economy. Inflation is forecast to be contracting overall, measured by the Consumer Price Index (CPI). But Core CPI, which excludes volatile food and sinking energy prices, should be up a smidge for September, although not as much as the deflation-fearing Fed wants to see. Both the Philadelphia Fed Index and the NY Empire Index should show manufacturing contracting in those regions.
The stock market is open Columbus Day, October 12, but the bond market is closed.>> The Week’s Economic Indicator CalendarWeaker 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 Oct 12 – Oct 16
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... A slightly higher percentage of economists think the Fed will start hiking rates this year, but the majority do not expect such a move until March. Note: In the lower chart, a 8% probability of change is an 92% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%
Probability of change from current policy:
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