Market Update for the Week of May 29, 2018

Info That Hits Us Where We Live

The week’s housing reports began with New Home Sales, down 1.5% in April. But they’re still 11.6% ahead of a year ago, and inventory, around 300,000, is at a nine-year high.

In contrast, low inventory was blamed for April’s 2.5% slide in Existing Home Sales. But this is just a tick below a 5.5 million annual rate, and demand is strong: 57% of sold homes were on the market less than 30 days.

Tight supply in many markets keeps prices rising, so house flipping is gaining. CoreLogic reports flips hit 6.2% of sales in Q1, the highest read in five years. 

Business Tip of the Week

No one can be all things to all people. In almost every industry, the successful people are the ones who find a niche and become experts in it.

Review of Last Week

KEEPING THEIR COOL… There were enough geopolitical gyrations to send stocks in both directions, but investors kept their cool and edged the three major market indexes up for the week. Uncertainties over Chinese trade and a North Korean summit were joined by shaky politics in Italy and Spain. 

A highlight of the week was the release of FOMC Minutes from the Fed’s last meeting, which indicated members may go easy with rate hikes, happy to let inflation briefly drift above the 2% target before applying the brakes.

Very decent economic data included Durable Goods Orders up in April (excluding the volatile transportation sector), initial and continuing jobless claims historically low and U. of Michigan Consumer Sentiment historically high.

The week ended with the Dow UP 0.2%, to 24753; the S&P UP 0.3%, to 2721; and the Nasdaq UP 1.1%, to 7434.

Geopolitical uncertainties sent investors to the safety of bonds, pushing prices up. The 30YR FNMA 4.0% bond ended UP .64, to $101.91. Even so, the national average 30-year fixed mortgage rate grew to 2011 levels 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?

Capital Economics reports that mortgage purchase applications approached a nine-year high in April, even as mortgage rates rose.

This Week’s Forecast

PENDING HOME SALES, GDP, MANUFACTURING AND JOBS UP, INFLATION MILD They’re forecasting Pending Home Sales up in April, while the Q1 GDP – 2nd Estimate should show decent growth. Factory activity is also predicted to be growing, by the Chicago PMI and ISM Index. The May jobs report is expected to show good Nonfarm Payrolls and Hourly Earnings numbers, nice for the housing market, while low Core PCE Prices should keep the Fed in check.

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 May 28 – Jun 1

Date Time (ET) Release For Consensus Prior Impact
Tu
May 29
10:00 Consumer Confidence May 127.5 128.7 Moderate
W
May 30
08:30 GDP – 2nd Estimate Q1 2.3% 2.3% HIGH
W
May 30
14:00 Fed’s Beige Book Apr NA NA Moderate
Th
May 31
08:30 Initial Unemployment Claims 05/26 227K 234K Moderate
Th
May 31
08:30 Continuing Unemployment Claims 05/19 NA 1.741M Moderate
Th
May 31
08:30 Personal Income Apr 0.3% 0.3% Moderate
Th
May 31
08:30 Personal Spending Apr 0.3% 0.4% HIGH
Th
May 31
08:30 Core PCE Prices Apr 0.1% 0.2% HIGH
Th
May 31
09:45 Chicago PMI May 57.9 57.6 HIGH
Th
May 31
10:00 Pending Home Sales Apr 0.7% 0.4% Moderate
Th
May 31
11:00 Crude Inventories 5/26 NA +5.8M Moderate
F
Jun 1
08:30 Average Workweek May 34.5 34.5 HIGH
F
Jun 1
08:30 Hourly Earnings May 0.3% 0.1% HIGH
F
Jun 1
08:30 Nonfarm Payrolls May 190K 164K HIGH
F
Jun 1
08:30 Unemployment Rate May 3.9% 3.9% HIGH
F
Jun 1
10:00 ISM Index May 58.0 57.3 HIGH

Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months… The Fed Fund futures market is still confident we’ll get a 0.25% hike in June. That rate should remain through the summer, but there’s a good possibility of another small gain in the fall. Note: In the lower chart, an 89% probability of change is only an 11% probability the rate will stay the same.

Current Fed Funds Rate: 1.50%-1.75%

After FOMC meeting on: Consensus
Jun 13 1.75%-2.00%
Aug   1 1.75%-2.00%
Sep 26 2.00%-2.25%

 

Probability of change from current policy:

After FOMC meeting on: Consensus
Jun 13          89%
Aug   1          13%
Sep 26          59%

Statistics source: www.markettrends.com

Material in this article from: Inside Lending Market Snapshot

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