Market Update for the Week of April 22, 2019


Housing Starts slowed 0.3% nationally in March, to a 1.139 million annual rate, staying strong in the West, but down a bit in the South and Northeast, with a big drop in the flood-ravaged Midwest.

Yet National Association of Home Builders builder confidence rose to 63 in April, thanks to job growth and low mortgage rates. That should mean an April uptick in starts, and a possible upward revision to March numbers.

Freddie Mac’s chief economist observed last week that although “mortgage rates have modestly increased… purchase activity reached a nine-year high–indicative of a strong spring homebuying season.”


INVESTORS GO LONG IN A SHORT WEEK… Financial markets were closed Good Friday, and in the short trading week, investors mostly went long, pushing the Dow and the Nasdaq up, leaving the S&P 500 flat.

The first full week of corporate earnings saw a slew of companies report first quarter beats, roundly rebuffing analysts expecting drops. Retail Sales rebounded nicely in March, up a very nice 1.6%.

Those seeking copacetic economic news had to look no further than Initial Unemployment Claims, down for the fifth straight week, to 192,000, a near-50-year low!

The week ended with the Dow UP 0.6%, to 26560; the S&P 500 off just two points, to 2905; and the Nasdaq UP 0.2%, to 7998.

Bonds were boosted by disappointing manufacturing reads from abroad. The 30YR FNMA 4.0% bond ended UP .06, to $102.47. In Freddie Mac’s Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate rose a tick but stayed well below its level of a year ago. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.


A poll of home shoppers by found that just under 60% were considering a home that needs major improvements and were willing to spend $20,000 or more for renovations.


NEW AND EXISTING HOME SALES, GDP SLIP JUST A BIT…  March New Home Sales and Existing Home Sales are forecast down a bit from February. The GDP-Advance Estimate for Q1 should show the economy growing at around a 2% annual rate, off a tick from the prior read.

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 still sees very little chance of a rate hike, or a rate cut, at the next three Fed meetups. Note: In the lower chart, a 1% probability of change is a 99% 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     1%
Jun 19     7%
Jul  31    11%
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Jim Passi
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