Market Update for the Week of July 30, 2018

Market Update for the Week of July 30, 2018

INFO THAT HITS US WHERE WE LIVE

Disappointing to see existing home sales decline in June for the third month in a row, but the market could be close to turning back up, as inventory rose from the year before for the first time in three years.

That’s important because the challenge with existing home sales has been supply. Demand remains strong, as 58% of existing homes sold in June were on the market less than a month.

New Home Sales also dipped in June, but they’re still up 2.4% from a year ago, inventory is the highest in nine years, and sales the first six months of 2018 are up 6.4% over the same period a year ago. So the housing recovery continues.

BUSINESS TIP OF THE WEEK

To reach your goals: 1) write them down; 2) break big goals into smaller ones to hit along the way; 3) when you reach a milestone, celebrate it!–experts say fun is a key ingredient in any successful venture.

Review of Last Week

STRONG FUNDAMENTALS… Worry over tariffs persists, but last week’s economic fundamentals were so good investor optimism triumphed, sending the Dow and S&P 500 up for the fourth week in a row. But the Nasdaq dipped thanks to some tumbling tech stocks.

With more than half the S&P 500 companies reporting, Q2 profits are up an average of 24.6% over last year and, more importantly, sales are up nearly 10%–solid evidence of growing demand.

Q2 GDP growth came in at 4.1%, with consumer spending up 4% and business investment up 9.4% this year. Some question if such growth is sustainable, but others feel the US economy is the strongest it’s been in a decade.

The week ended with the Dow UP 1.6%, to 25451; the S&P 500 UP 0.6%, to 2819, and the Nasdaq down 1.1%, to 7737.

Bond prices were kept in check by the positive economic data. The 30YR FNMA 4.0% bond ended down .25, to $101.56. In Freddie Mac’s latest Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate shifted a tick higher. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?

The homeownership rate grew to 64.3% in Q2, up from 63.7% in Q2 of 2017. That’s 1.8 million owner-occupied households added in the past year!

This Week’s Forecast

JAM PACKED WITH DATA, PENDING HOME SALES TO THE FED… Analysts predict a gain in June Pending Home Sales, so expect a near term bump in existing home sales. Inflation should edge up by Core PCE Prices and the Employment Cost Index. Also forecast up is Personal Spending, manufacturing by the ISM Index and Chicago PMI, and Nonfarm Payrolls. Not seen going up are rates, in the Fed’s FOMC Rate Decision.

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 30 – Aug 3

DateTime (ET)ReleaseForConsensusPriorImpact
M
Jul 30
10:00Pending Home SalesJun0.2%-0.5%Moderate
Tu
Jul 31
08:30Employment Cost IndexQ20.7%0.8%HIGH
Tu
Jul 31
08:30Personal IncomeJun0.4%0.4%Moderate
Tu
Jul 31
08:30Personal SpendingJun0.5%0.2%HIGH
Tu
Jul 31
08:30Core PCE PricesJun0.2%0.2%HIGH
Tu
Jul 31
10:00Chicago PMIJul62.064.1HIGH
Tu
Jul 31
10:00Consumer ConfidenceJul126.6126.4Moderate
W
Aug 1
10:00ISM IndexJul59.460.2HIGH
W
Aug 1
10:30Crude Inventories07/28NA-6.2MModerate
W
Aug 1
14:00FOMC Rate DecisionAug1.75-2.00%1.75-2.00%HIGH
Th
Aug 2
08:30Initial Unemployment Claims07/28220K217KModerate
Th
Aug 2
08:30Continuing Unemployment Claims07/21NA1.745MModerate
F
Aug 3
08:30Average WorkweekJul34.534.5HIGH
F
Aug 3
08:30Hourly EarningsJul0.3%0.2%HIGH
F
Aug 3
08:30Nonfarm PayrollsJul190K213KHIGH
F
Aug 3
08:30Unemployment RateJul3.9%4.0%HIGH
F
Aug 3
08:30Trade BalanceJun-$45.6B-$43.1BModerate
F
Aug 3
10:00ISM ServicesJul58.559.1Moderate

Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months…Almost no one sees a rate hike from the Fed this Wednesday, but a tick up is expected in September, then no increase 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         94%
Nov   8         13%

Statistics source: www.markettrends.com

Material in this article from: Inside Lending Market Snapshot

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