Market Update for the Week of April 8, 2019


Freddie Mac’s chief economist noted, “Purchase mortgage application demand saw the second highest weekly increase in the last year and…overall mortgage demand rose to the highest level since the fall of 2016.”

CoreLogic’s chief economist added, “we expect mortgage rates to remain low and be a boost for the spring buying season,” and that “could lead to a pickup in home price growth later this year.”

Ellie Mae‘s latest Millennial Tracker reports purchase requests from Millennials increased to 87% of all purchase requests made in February, up 2% from January.


BIG JOBS, LITTLE INFLATION… The March jobs report came in with a big 196,000 new Nonfarm Payrolls but little inflation threat, thanks to modest wage gains, sending the S&P 500 on its longest winning streak in a year and a half.

The healthy jobs boost says the economy is growing nicely, but low inflation concerns mean the Fed needn’t raise rates to keep prices in check. Their favorite inflation measure fell 1.4% in January, well under their 2% target.

Weekly unemployment claims sank to their lowest level since Joe Namath won the Super Bowl, and Chinese President Xi sent President Trump a letter saying great progress had been made toward wrapping up trade negotiations ASAP.

The week ended with the Dow UP 1.9%, to 26425; the S&P 500 UP 2.1%, to 2893; and the Nasdaq UP 2.7%, to 7939.

Bonds finished on a mostly flat note. The 30YR FNMA 4.0% bond ended down .10, to $102.73. After the prior week’s major drop, the national average 30-year fixed mortgage rate held steady in Freddie Mac’s Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.


The Census Bureau reported the value of all construction put in place in February hit the highest level since May 2018, with homebuilding rising 0.7% to $540.9 billion.


LESS INFLATION, MORE FED …  Another measure of inflation, Core CPI, not the Fed’s favorite, is expected to stay within their target range. We should get more insight into the Fed’s view of the interest rate picture when the FOMC Minutes from the last meeting are revealed on Wednesday.

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.


Forecasting Federal Reserve policy changes in coming months… Wall Street sees little chance of a rate hike through the next three Fed meetings, though the probability of a rate cut is increasing. Note: In the lower chart, a 4% probability of change is a 96% probability the rate will stay the same.

Current Fed Funds Rate: 2.25%-2.50%

May  1 2.25%-2.50%
Jun 19 2.25%-2.50%
Jul  31 2.25%-2.50%


Probability of change from current policy:

May  1     4%
Jun 19    16%
Jul  31    20%
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