Market Update For the Week of April 30, 2018

Market Update For the Week of April 30, 2018

Info That Hits Us Where We Live

The first good news was that Existing Home Sales rose 1.1% in March to a 5.60 million annual rate. Yeah, they were down a tick from March 2017, but that month had the second highest sales pace last year.

Then, March New Home Sales also surprised to the upside, gaining 4.0%, to a 694,000 annual rate. Sales are 8.8% ahead of a year ago, posting the second highest sales pace since 2007.

Freddie Mac’s chief economist noted, “Despite the increase in borrowing costs, demand… remains solid. The Mortgage Bankers Association reported… activity was up 11% from a year ago.”

Business Tip of the Week

When talking to someone, you’ll never be at a loss for words if you use the FORD approach: Family, Occupation, Recreation, Dreams. 

Review of Last Week

LITTLE CHANGE… Investors keep balancing optimism about corporate earnings and economic growth against worries over rising interest rates and whether growth will continue. By Friday,  worriers barely prevailed, the S&P 500 ending flat, the Dow and Nasdaq down slightly.

We’re right in the middle of first quarter earnings season and 80% of the S&P 500 companies reporting bested forecasts (though that didn’t necessarily boost share prices).

Q1 GDP slipped to 2.3% (Advance read), but that beat estimates, and real GDP is still up 2.9% from a year ago. Jobless claims fell to their lowest level since 1969, while Michigan Consumer Sentiment came in higher than expected once again.

The week ended with the Dow down 0.6%, to 24311; the S&P 500 flat, at 2670; and the Nasdaq down 0.4%, to 7120.

Bonds edged up as investors feared weak growth in France and the UK might be contagious. The 30YR FNMA 4.0% bond ended UP .12, at $101.81. Still low by historical standards, the national average 30-year fixed mortgage rate continued up in Freddie Mac’s latest Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

Did You Know?

The Census Bureau reports homeownership held steady in Q1 2018, but rental households fell for the fourth straight quarter, “a strong sign households are making the switch from renting to buying,” according to one prominent economist.

This Week’s Forecast

PENDING HOME SALES, MANUFACTURING, JOBS GROW; INFLATION AND THE FED STAY QUIET March Pending Home Sales are predicted up, while two factory reads, the Chicago PMI and ISM Index, are forecast in solid growth territory. Most important to housing, jobs are expected up, with new Nonfarm Payrolls back near 200,000, and Hourly Earnings rising. Core PCE Prices inflation should be quiet, and quieter still will be the Fed’s FOMC Rate Decision: no hike.

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 Apr 30 – May 4

DateTime (ET)ReleaseForConsensusPriorImpact
M
Apr 30
08:30Personal IncomeMar0.4%0.4%Moderate
M
Apr 30
08:30Personal SpendingMar0.4%0.2%HIGH
M
Apr 30
08:30Core PCE PricesMar0.2%0.2%HIGH
M
Apr 30
09:45Chicago PMIApr58.057.4HIGH
M
Apr 30
10:00Pending Home SalesMar1.5%3.1%Moderate
Tu
May 01
10:00ISM IndexApr58.559.3HIGH
W
May 02
10:30Crude Inventories04/28NA+2.2MModerate
W
May 02
14:00FOMC Rate DecisionMay1.50%-1.75%1.50%-1.75%HIGH
Th
May 03
08:30Initial Unemployment Claims04/28220K209KModerate
Th
May 03
08:30Continuing Unemployment Claims04/21NA1.837MModerate
Th
May 03
08:30Productivity – PreliminaryQ10.8%0.0%Moderate
Th
May 03
08:30Unit Labor Costs – PreliminaryQ13.0%2.5%Moderate
Th
May 03
08:30Trade BalanceMar-$49.8B-$57.6BModerate
Th
May 03
10:00ISM ServicesApr58.358.8HIGH
F
May 04
08:30Average WorkweekApr34.534.5HIGH
F
May 04
08:30Hourly EarningsApr0.2%0.3%HIGH
F
May 04
08:30Nonfarm PayrollsApr190K103KHIGH
F
May 04
08:30Unemployment RateApr4.0%4.1%HIGH

Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… Wall Street figures this week’s Fed meet will be a non-event, but it’s a cinch we’ll get a quarter percent bump in June.  Note: In the lower chart, a 7% probability of change is a 93% certainty the rate will stay the same.

Current Fed Funds Rate: 1.50%-1.75%

After FOMC meeting on:Consensus
May 21.50%-1.75%
Jun 131.75%-2.00%
Aug 11.75%-2.00%

 

Probability of change from current policy:

After FOMC meeting on:Consensus
May 2          7%
Jun 13      100%
Aug 1         11%

Statistics source: www.markettrends.com

Material in this article from: Inside Lending Market Snapshot

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