Market Update for the Week of October 29, 2018

MARKET UPDATE

Pending Home Sales (an index of contracts signed on existing homes) went up 0.5% in September. This indicates a modest boost in existing home sales come October.

But September New Home Sales skidded down 5.5%, to a 553,000 annual rate. Yet the trend stays upward, as sales the first nine months of 2018 are still up 3.4% from the same period a year ago.

The Mortgage Bankers Association chief economist feels home sales will grow over the next five years, as mortgage rates peak and 47 million millennials enter their home buying years–“a tremendous support for housing demand.”

REVIEW OF LAST WEEK

TURN THE PAGE… Let us simply move on from this very bad week in the stock market, whose best performance was the 3.0% dive for the Dow. Investors worried about earnings growth, even though the data proved otherwise.

To wit, FactSet reported the blended third quarter corporate earnings growth rate was 22.5%, and the forward 12-month earnings-per-share estimate is up 0.8% over the same period.

Friday, we learned the economy grew 3.5% annually in Q3, after 4.2% growth in Q2, the best consecutive quarters of economic performance since 2005. So, what worries Wall Street? That the Fed will hike too fast and kill the party.

The week ended with the Dow down 3.0%, to 24688; the S&P 500 down 3.9%, to 2659; and the Nasdaq down 3.8%, to 7167.

The weakness in stocks sent traders over to bonds, pushing prices higher. The 30YR FNMA 4.0% bond ended UP .47, at $100.36. Freddie Mac’s latest Primary Mortgage Market Survey had the national average 30-year fixed mortgage rate up just one basis point (0.01%). Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?

A recent report on insights from 3,000 consumers revealed that more video is now consumed on computers, tablets and smartphones than on TV.

THIS WEEK’S FORECAST

INFLATION MILD; EMPLOYMENT COSTS UP; JOBS, FACTORIES STRONG…  The Fed likes the Core PCE Prices take on inflation, so it’s good that a mild read is forecast. But more inflation could come with a climbing Employment Cost Index. In line with that, we should see growth in wages (Average Hourly Earnings) and Nonfarm Payrolls in Friday’s jobs report. Finally, the ISM Index is expected to reveal factories are still humming nicely.

NOTE: Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.

FEDERAL RESERVE WATCH

Forecasting Federal Reserve policy changes in coming months… The market expects the Fed Funds Rate to hold come November, then bump up a quarter percent in December, but stay there through the beginning of next year. Note: In the lower chart, a 5% probability of change is a 95% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

AFTER FOMC MEETING ON: CONSENSUS
Nov   8 2.00%-2.25%
Dec 19 2.25%-2.50%
Jan  30 2.25%-2.50%

 

Probability of change from current policy:

AFTER FOMC MEETING ON: CONSENSUS
Nov   8    5%
Dec 19   74%
Jan 30   32%
The Jim Passi Team at Citywide Home Loans proudly serves Illinois, Wisconsin, Michigan, Indiana, Georgia and Flordia. If you are looking to buy a home or refinance, we have you covered. Apply Now to get started.
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Jim Passi
Regional Manager
NMLS# 158000

1300 East Woodfield Road, Suite 302
Schaumburg, IL 60173
Mobile: 847-899-1813
Office: 847-273-3265

To say the home buying

To say the home buying process is anything less than stressful is a felony! Jim, first and foremost, helped us cope, understand and work through every step when we bought our home. There were many, upon many moments where we needed counsel and Jim was always there. His responses were immediate and insightful. Speaking with Jim was like speaking with a friend and you knew he had your best interest in mind. So, the needed, constant communication with him never became a chore. My husband and I can say, without shadow of a doubt, that Jim was our cheerleader that motivated us to continue on (believe us, our situation was one for the books!).

Now, that we are done (yay!), and the process is over, our hands have been wiped clean; we are still going to continue our rapport with Jim. Knowing he has invested so much time with us, there is no reason to cease our relationship now. We thank Jim for getting our family to where we are today, a brand new home for our son to grow up in.

Angela & Andrew