Market Update for the Week of July 23, 2018

Market Update for the Week of July 23, 2018


After rising in May at their fastest pace in 11 years, Housing Starts fell 12.3% in June, to a 1.173 million annual rate. Yet the National Association of Home Builders reports strong buyer demand keeps builder optimism historically high.

The fact is, housing starts data is quite volatile month to month. To allow for this, compare the first six months of 2018 with the same period in 2017 and you’ll find starts are up 7.4% versus a year ago.

Similarly, building permits were down 2.2% in June, to a 1.273 million annual rate. Yet the three-month average is close to its highest level since 2007. Also, Q2 saw builders completing units at the fastest quarterly pace since the recession.


Four great lead sources: present clients; past clients; prospects you haven’t contacted in a while; and cold called prospects who like your pitch but don’t need you now–ask if they can refer you to someone who might.

Review of Last Week

HEADLINES, SHMEDLINES… Headlines screamed tariff and interest rate warnings, but investors took them in stride, as climbing corporate profits and steady economic data left the three major stock indexes little changed for the week.

Retail Sales rose in June for the fifth month in a row, a strong 0.5%. Economists linked this to lower taxes and higher employment, as weekly jobless claims fell to their lowest level in more than 48 years.

And let’s remember, the Fed only hikes short-term interest rates. Long-term mortgage rates don’t necessarily rise by the same amount as the Fed Funds Rate, or at the same time.

The week ended with the Dow UP 0.2%, to 25058; the S&P 500 UP 0.52, to 2802; and the Nasdaq down 0.1%, to 7820.

After outperforming for weeks, longer dated Treasuries and mortgage bonds finished a bit lower on Friday. The 30YR FNMA 4.0% bond ended down .17, to $101.81. The national average 30-year fixed mortgage rate inched backward 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.


Freddie Mac‘s chief economist says the lack of movement in mortgage rates is “good news for price sensitive home shoppers, given that this stability in borrowing costs gives them a little extra time to find the right home.”

This Week’s Forecast

EXISTING HOME SALES UP, NEW HOMES OFF, AS THE ECONOMY SPIKES Economists predict Existing Home Sales to recover in June, New Home Sales to slip a bit, and economic growth to hit 4.1% in the GDP-Advanced read for Q2.

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 Jul 23 – Jul 27

DateTime (ET)ReleaseForConsensusPriorImpact
Jul 23
10:00Existing Home SalesJun5.45M5.43MModerate
Jul 25
10:00New Home SalesJun670K689KModerate
Jul 25
10:30Crude Inventories07/21NA+5.8MModerate
Jul 26
08:30Initial Unemployment Claims07/21215K207KModerate
Jul 26
08:30Continuing Unemployment Claims07/14NA1.751MModerate
Jul 26
08:30Durable Goods OrdersJun3.2%-0.6%Moderate
Jul 26
08:30Durable Goods Orders – ex transportationJun0.4%-0.3%Moderate
Jul 27
08:30GDP – AdvancedQ24.1%2.0%HIGH
Jul 27
10:00U. of Michigan Consumer Sentiment – FinalJul97.197.1Moderate

Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months…For all the worries voiced lately over rate hikes, the Fed Funds futures market sees no move in August and just a small blip in September, then nothing again in November. Note: In the lower chart, a 3% probability of change is a 97% certainty the rate will stay the same.

Current Fed Funds Rate: 1.75%-2.00%

After FOMC meeting on:Consensus
Aug   11.75%-2.00%
Sep 262.00%-2.25%
Nov   82.00%-2.25%


Probability of change from current policy:

After FOMC meeting on:Consensus
Aug   1           3%
Sep 26         89%
Nov   8         18%

Statistics source:

Material in this article from: Inside Lending Market Snapshot

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