Thoughts to Ponder…
- A balanced diet means a cupcake in each hand.
- When nothing is going right, go left.
- I’m not clumsy! The floor just hates me, the table and chairs are bullies, and the walls get in my way.
- You can trust your dog to guard your house but never trust your dog to guard your sandwich.
- If people are talking behind your back, be happy that you are the one in front.
And now for the market update…
Interest Rates: As expected the Fed did not move interest rates higher at their meeting this week. Despite the fact that the June employment report was quite strong, there were still lingering effects from May’s dismal employment numbers. It is seen in the Fed minutes the words “strengthened” to describe the labor market and “growing strongly” in respect to household spending.
The report is somewhat optimistic about the economy given that job growth and consumer spending remain strong. This may be enough for the Fed to raise interest rates in September. On the flip side some policy makers are speaking, in a tone we have heard from a long time, in which they are saying rates will remain low for some time.
Mortgage Rates: The combination of interest rates rising slightly has once again shown how sensitive borrowers are to rate movements. Refinance volume which is the most responsive to rate changes declined with 15.0 percent for the week ending July 22nd. Purchase applications moved lower by 3.0 percent, which may also be tied into the normal housing slowdown which often begins to occur moving into late summer.
S&P Case-Shiller Home Value Index: Home prices are softening which appears to be having a positive impact on sales. According to the Case-Shiller Index home prices declined 0.1 percent for the month of May. Analysts were expecting an increase ranging from 0.3 percent all the way up to 1.3 percent.
Additionally, there was a significant revision to April’s numbers. After originally being reported as a gain of 0.5 percent, the report was revised downward showing a decline of prices by 0.2 percent. Prices compared to the same time last year are up 5.2 percent.
New Home Sales: This housing sector continues to show strength as sales continued to increase in June. The latest report shows new homes are selling at an annualized pace of 592,000. This is higher than the previous month’s upward revision from 551K up to 572K.
The increase in sales did not occur at the expense of prices. Median home prices increased to $306,700, which reflects a 6.2 percent rise. Overall new home prices are higher by 6.1 percent from the same time last year.
Pending Home Sales: This sector of the housing market unfortunately has been the weakest area as of late. Pending sales increased only 0.2 percent for the month of June. Sales compared to the same time last year are up only 1.0 percent.
First Time Jobless Claims: Claims for the week ending July 23rd moved up slightly from 252K to 266K. Overall the pace of claims remains healthy and there appears to be stability in the job markets.
This week’s potential market moving reports are:
- Monday August 1st – ISM Manufacturing Index and Construction Spending
- Tuesday August 2nd – Personal Income and Outlays
- Wednesday August 3rd – MBA Mortgage Applications and ADP Employment Report
- Thursday August 4th – First Time Jobless Claims and Factory Orders
- Friday August 5th – Employment Situation