MONDAY, January 21st
M.L. King, Jr. DayAll Markets Closed
TUESDAY, January 22nd
In response to increasing concerns about a U.S. recession and turmoil in domestic and global financial markets, the Federal Reserve unexpectedly cut the federal funds rate by 75 basis points today. The target for the fed fund rate now stands at 3.50%. The Fed also cut the discount rate by 75 basis points to 4.00%. This was the first three-quarter point rate reduction since 1991 and the first intermeeting cut since September, 2001. The statement released after the policy action explained that the Committee made the move because growth was slowing significantly under tighter credit conditions and the housing downturn had spilled over into softening labor market conditions. The Fed acknowledged that considerable downside risks to growth remain and that they expect inflation to continue to subside this year; however they would monitor pressures closely. This suggests the FOMC will continue to cut rates until economic data and financial market conditions improve appreciably.
WEDNESDAY, January 23rd
The MBA mortgage applications index rose 8.3% to 981.5% for the week that ended January 18. This was the highest index level since April 2004. Total mortgage applications are now 60.6% above their year ago level. Gains were once again led by refinancing applications. The purchase index declined 4.6% on the week while refinancings surged 16.9%. Application activity, especially for refinancing will continue to be supported by low rates, which are expected to drop further from here.
The markets expect more rate cuts next week, even after an outsized, between-meeting rate reduction yesterday. Fed funds futures traders are fully pricing in a half-point rate cut at the conclusion of the FOMC’s regularly scheduled 2-day policy meeting next Wednesday. Odds of another 75 basis point rate cut next week are hovering around 45%.
THURSDAY, January 24th
Existing home sales fell 2.2% in December to an annual pace of 4.89 million units. For all of 2007, existing home sales totaled 5.652 million, down 12.8% from its 2006 level and the lowest annual pace since 2002. After stabilizing somewhat early in Q4, sales have resumed a downward trend entering into this year. Given the weakness in home prices, buyers will probably wait to see an end to the downturn before wading back into the market. Home sales will remain weak in the first half of this year with price declines expected to continue as the drivers of stronger demand come back into balance under lower rates, stable credit conditions and healthy economic activity.
Jobless claims fell 1k to 301k for the week ending January 19. Expectations were for claims to rise to 320k. This is the fourth consecutive week that claims declined which has shored up the labor outlook as mildly positive. These data, combined with a decline in the 4 week average and lower continuing claims indicate a softer labor market but not a recessionary one. Economists caution that claims data is especially volatile this time of year because of the holidays and is subject to revision.
Fixed mortgage rates fell to their lowest level since 2004 this week. 30-year fixed rates averaged 5.48% this week compared to 5.69% last week according to Freddie Mac’s mortgage market survey. The average 30-year fixed rate has fallen almost three quarters of a point since the beginning of the year. Rates are likely to fall further from here which would definitely help homeowners facing resets on their adjustable rate mortgages.
FRIDAY, January 25th
Stock Market Close for the Week
Index Latest A Week Ago Change
DJIA 12207.17 12099.30 +107.87 or +0.89%
NASDAQ 2326.20 2340.02 -13.82 or -0.59%
WEEK IN ADVANCE
After this week’s surprise, inter-meeting rate cut and fiscal stimulus package agreement in Washington D.C., next week’s FOMC meeting and economic indicators seem anti-climatic. Nevertheless, the policy decision and statement will be closely monitored while the data will provide the first estimate on Q4 economic growth and the latest readings on new home sales, manufacturing, consumer spending and incomes.
Sources: IBC' s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco
Saturday, January 26, 2008
Saturday, January 12, 2008
Economic Highlights for the Week Ending January 11, 2008
MONDAY, January 7th
The magnitude of the Fed’s next rate cut came into question following the release of a bleak employment report for December. A quarter point cut was essentially priced in and then the jobs data brought a half-point rate cut into play. Expectations for the larger cut were still modestly increasing Monday with fed funds futures traders pricing in a 70% probability the Fed will cut the fed funds target by 50 basis points to 3.75% at the January 29-30 meeting, up from 66% odds on Friday.
TUESDAY, January 8th
The pending home sales index fell 2.6% in November to 87.6% after an upwardly revised level of 89.9% in October. November’s level remains above readings in August and September indicating stabilization in existing home sales according to economists at the NAR. The economists further project fairly steady existing home sales over the next several months, a gradual rise the second half of this year with additional improvement in 2009. Existing home sales are expected to total 5.66 million in 2007, the fifth highest on record, with a 1.9% drop in the median home price to $217,600.
Consumer credit increased by $15.5 billion in November after a subdued $2.0 billion gain in October. Over the past year consumer credit has grown an average of $10.3 billion a month or at a 5.2% annual rate. The surge in credit usage in November suggests consumers are using credit cards and other types of loans to finance consumption instead of mortgage equity withdrawals.
WEDNESDAY, January 9th
The MBA mortgage applications index surged 32.2% to 706.0% for the week ending January 4. The purchase index was up 14.7% on the week while the refinancing index gained a whopping 53.8%. Holiday related declines in mortgage activity have mostly been reversed with this week’s gains. The steady decrease in mortgage rates recently seems to have finally caught up with application activity, but it is still too early to tell if these gains will be maintained - which would essentially mark an end to last year’s housing market correction.
Economists from several major Wall Street firms and Moody’s Economy.com are saying that the economy could already be in recession based on last week’s employment report that showed a sharp jump in the unemployment rate with little growth. A recession is loosely defined as two back to back quarters where growth contracts. The National Bureau of Economic Research refines the process of determining a recession by looking at more detailed data and announcing the results six months to a year after it happens. Recession or not, growth has slowed significantly enough for the Fed to cut rates aggressively when they meet at the end of this month.
THURSDAY, January 10th
Slower economic growth evidenced by the dismal employment report placed downward pressure on interest rates in the past week. 30-year fixed rate mortgages averaged 5.87% this week compared with 6.07% last week according to Freddie Mac’s mortgage market survey. Economists at Freddie Mac point out that a recent quarter point drop in mortgage rates has boosted in refinance activity, which is expected to continue in the near term.
FRIDAY, January 11th
Import prices were unchanged in December better than an expected gain of 0.1%. A 0.6% drop in petroleum prices helped subdue overall import price gains. Non-petroleum prices rose a modest 0.3% on the month. Flat import prices and a drop in petroleum prices last month follow outsized gains in the previous two months. Petroleum is up over 50% in the last year which has driven a 10.9% rise in total import costs.
The international trade deficit on goods and services widened to $63.1 billion in November from a $57.8 billion trade gap in October. Imports surged in November on higher crude oil prices though consumer goods spiked as well probably in preparation for the holidays. Oil import volumes actually fell. Exports grew modestly on the month supported by strong global economies and a weaker dollar.
Stock Market Close for the Week
Index Latest A Week Ago Change
DJIA 12606.30 12800.18 -193.88 or -1.51%
NASDAQ 2439.94 2504.65 -64.71 or -2.58%
WEEK IN ADVANCE
The economic calendar in the coming week is jam-packed with everything from inflation and spending to housing and manufacturing indicators. With the end of the month FOMC meeting fast approaching, economists and market players will be looking to the data to support an aggressive policy action by the Fed.
Sources: IBC' s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco
The magnitude of the Fed’s next rate cut came into question following the release of a bleak employment report for December. A quarter point cut was essentially priced in and then the jobs data brought a half-point rate cut into play. Expectations for the larger cut were still modestly increasing Monday with fed funds futures traders pricing in a 70% probability the Fed will cut the fed funds target by 50 basis points to 3.75% at the January 29-30 meeting, up from 66% odds on Friday.
TUESDAY, January 8th
The pending home sales index fell 2.6% in November to 87.6% after an upwardly revised level of 89.9% in October. November’s level remains above readings in August and September indicating stabilization in existing home sales according to economists at the NAR. The economists further project fairly steady existing home sales over the next several months, a gradual rise the second half of this year with additional improvement in 2009. Existing home sales are expected to total 5.66 million in 2007, the fifth highest on record, with a 1.9% drop in the median home price to $217,600.
Consumer credit increased by $15.5 billion in November after a subdued $2.0 billion gain in October. Over the past year consumer credit has grown an average of $10.3 billion a month or at a 5.2% annual rate. The surge in credit usage in November suggests consumers are using credit cards and other types of loans to finance consumption instead of mortgage equity withdrawals.
WEDNESDAY, January 9th
The MBA mortgage applications index surged 32.2% to 706.0% for the week ending January 4. The purchase index was up 14.7% on the week while the refinancing index gained a whopping 53.8%. Holiday related declines in mortgage activity have mostly been reversed with this week’s gains. The steady decrease in mortgage rates recently seems to have finally caught up with application activity, but it is still too early to tell if these gains will be maintained - which would essentially mark an end to last year’s housing market correction.
Economists from several major Wall Street firms and Moody’s Economy.com are saying that the economy could already be in recession based on last week’s employment report that showed a sharp jump in the unemployment rate with little growth. A recession is loosely defined as two back to back quarters where growth contracts. The National Bureau of Economic Research refines the process of determining a recession by looking at more detailed data and announcing the results six months to a year after it happens. Recession or not, growth has slowed significantly enough for the Fed to cut rates aggressively when they meet at the end of this month.
THURSDAY, January 10th
Slower economic growth evidenced by the dismal employment report placed downward pressure on interest rates in the past week. 30-year fixed rate mortgages averaged 5.87% this week compared with 6.07% last week according to Freddie Mac’s mortgage market survey. Economists at Freddie Mac point out that a recent quarter point drop in mortgage rates has boosted in refinance activity, which is expected to continue in the near term.
FRIDAY, January 11th
Import prices were unchanged in December better than an expected gain of 0.1%. A 0.6% drop in petroleum prices helped subdue overall import price gains. Non-petroleum prices rose a modest 0.3% on the month. Flat import prices and a drop in petroleum prices last month follow outsized gains in the previous two months. Petroleum is up over 50% in the last year which has driven a 10.9% rise in total import costs.
The international trade deficit on goods and services widened to $63.1 billion in November from a $57.8 billion trade gap in October. Imports surged in November on higher crude oil prices though consumer goods spiked as well probably in preparation for the holidays. Oil import volumes actually fell. Exports grew modestly on the month supported by strong global economies and a weaker dollar.
Stock Market Close for the Week
Index Latest A Week Ago Change
DJIA 12606.30 12800.18 -193.88 or -1.51%
NASDAQ 2439.94 2504.65 -64.71 or -2.58%
WEEK IN ADVANCE
The economic calendar in the coming week is jam-packed with everything from inflation and spending to housing and manufacturing indicators. With the end of the month FOMC meeting fast approaching, economists and market players will be looking to the data to support an aggressive policy action by the Fed.
Sources: IBC' s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco
Economic Highlights for the Week Ending January 11, 2008
MONDAY, January 7th
The magnitude of the Fed’s next rate cut came into question following the release of a bleak employment report for December. A quarter point cut was essentially priced in and then the jobs data brought a half-point rate cut into play. Expectations for the larger cut were still modestly increasing Monday with fed funds futures traders pricing in a 70% probability the Fed will cut the fed funds target by 50 basis points to 3.75% at the January 29-30 meeting, up from 66% odds on Friday.
TUESDAY, January 8th
The pending home sales index fell 2.6% in November to 87.6% after an upwardly revised level of 89.9% in October. November’s level remains above readings in August and September indicating stabilization in existing home sales according to economists at the NAR. The economists further project fairly steady existing home sales over the next several months, a gradual rise the second half of this year with additional improvement in 2009. Existing home sales are expected to total 5.66 million in 2007, the fifth highest on record, with a 1.9% drop in the median home price to $217,600.
Consumer credit increased by $15.5 billion in November after a subdued $2.0 billion gain in October. Over the past year consumer credit has grown an average of $10.3 billion a month or at a 5.2% annual rate. The surge in credit usage in November suggests consumers are using credit cards and other types of loans to finance consumption instead of mortgage equity withdrawals.
WEDNESDAY, January 9th
The MBA mortgage applications index surged 32.2% to 706.0% for the week ending January 4. The purchase index was up 14.7% on the week while the refinancing index gained a whopping 53.8%. Holiday related declines in mortgage activity have mostly been reversed with this week’s gains. The steady decrease in mortgage rates recently seems to have finally caught up with application activity, but it is still too early to tell if these gains will be maintained - which would essentially mark an end to last year’s housing market correction.
Economists from several major Wall Street firms and Moody’s Economy.com are saying that the economy could already be in recession based on last week’s employment report that showed a sharp jump in the unemployment rate with little growth. A recession is loosely defined as two back to back quarters where growth contracts. The National Bureau of Economic Research refines the process of determining a recession by looking at more detailed data and announcing the results six months to a year after it happens. Recession or not, growth has slowed significantly enough for the Fed to cut rates aggressively when they meet at the end of this month.
THURSDAY, January 10th
Slower economic growth evidenced by the dismal employment report placed downward pressure on interest rates in the past week. 30-year fixed rate mortgages averaged 5.87% this week compared with 6.07% last week according to Freddie Mac’s mortgage market survey. Economists at Freddie Mac point out that a recent quarter point drop in mortgage rates has boosted in refinance activity, which is expected to continue in the near term.
FRIDAY, January 11th
Import prices were unchanged in December better than an expected gain of 0.1%. A 0.6% drop in petroleum prices helped subdue overall import price gains. Non-petroleum prices rose a modest 0.3% on the month. Flat import prices and a drop in petroleum prices last month follow outsized gains in the previous two months. Petroleum is up over 50% in the last year which has driven a 10.9% rise in total import costs.
The international trade deficit on goods and services widened to $63.1 billion in November from a $57.8 billion trade gap in October. Imports surged in November on higher crude oil prices though consumer goods spiked as well probably in preparation for the holidays. Oil import volumes actually fell. Exports grew modestly on the month supported by strong global economies and a weaker dollar.
Stock Market Close for the Week
Index Latest A Week Ago Change
DJIA 12606.30 12800.18 -193.88 or -1.51%
NASDAQ 2439.94 2504.65 -64.71 or -2.58%
WEEK IN ADVANCE
The economic calendar in the coming week is jam-packed with everything from inflation and spending to housing and manufacturing indicators. With the end of the month FOMC meeting fast approaching, economists and market players will be looking to the data to support an aggressive policy action by the Fed.
Sources: IBC' s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco
The magnitude of the Fed’s next rate cut came into question following the release of a bleak employment report for December. A quarter point cut was essentially priced in and then the jobs data brought a half-point rate cut into play. Expectations for the larger cut were still modestly increasing Monday with fed funds futures traders pricing in a 70% probability the Fed will cut the fed funds target by 50 basis points to 3.75% at the January 29-30 meeting, up from 66% odds on Friday.
TUESDAY, January 8th
The pending home sales index fell 2.6% in November to 87.6% after an upwardly revised level of 89.9% in October. November’s level remains above readings in August and September indicating stabilization in existing home sales according to economists at the NAR. The economists further project fairly steady existing home sales over the next several months, a gradual rise the second half of this year with additional improvement in 2009. Existing home sales are expected to total 5.66 million in 2007, the fifth highest on record, with a 1.9% drop in the median home price to $217,600.
Consumer credit increased by $15.5 billion in November after a subdued $2.0 billion gain in October. Over the past year consumer credit has grown an average of $10.3 billion a month or at a 5.2% annual rate. The surge in credit usage in November suggests consumers are using credit cards and other types of loans to finance consumption instead of mortgage equity withdrawals.
WEDNESDAY, January 9th
The MBA mortgage applications index surged 32.2% to 706.0% for the week ending January 4. The purchase index was up 14.7% on the week while the refinancing index gained a whopping 53.8%. Holiday related declines in mortgage activity have mostly been reversed with this week’s gains. The steady decrease in mortgage rates recently seems to have finally caught up with application activity, but it is still too early to tell if these gains will be maintained - which would essentially mark an end to last year’s housing market correction.
Economists from several major Wall Street firms and Moody’s Economy.com are saying that the economy could already be in recession based on last week’s employment report that showed a sharp jump in the unemployment rate with little growth. A recession is loosely defined as two back to back quarters where growth contracts. The National Bureau of Economic Research refines the process of determining a recession by looking at more detailed data and announcing the results six months to a year after it happens. Recession or not, growth has slowed significantly enough for the Fed to cut rates aggressively when they meet at the end of this month.
THURSDAY, January 10th
Slower economic growth evidenced by the dismal employment report placed downward pressure on interest rates in the past week. 30-year fixed rate mortgages averaged 5.87% this week compared with 6.07% last week according to Freddie Mac’s mortgage market survey. Economists at Freddie Mac point out that a recent quarter point drop in mortgage rates has boosted in refinance activity, which is expected to continue in the near term.
FRIDAY, January 11th
Import prices were unchanged in December better than an expected gain of 0.1%. A 0.6% drop in petroleum prices helped subdue overall import price gains. Non-petroleum prices rose a modest 0.3% on the month. Flat import prices and a drop in petroleum prices last month follow outsized gains in the previous two months. Petroleum is up over 50% in the last year which has driven a 10.9% rise in total import costs.
The international trade deficit on goods and services widened to $63.1 billion in November from a $57.8 billion trade gap in October. Imports surged in November on higher crude oil prices though consumer goods spiked as well probably in preparation for the holidays. Oil import volumes actually fell. Exports grew modestly on the month supported by strong global economies and a weaker dollar.
Stock Market Close for the Week
Index Latest A Week Ago Change
DJIA 12606.30 12800.18 -193.88 or -1.51%
NASDAQ 2439.94 2504.65 -64.71 or -2.58%
WEEK IN ADVANCE
The economic calendar in the coming week is jam-packed with everything from inflation and spending to housing and manufacturing indicators. With the end of the month FOMC meeting fast approaching, economists and market players will be looking to the data to support an aggressive policy action by the Fed.
Sources: IBC' s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco
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