Market Update for the week of November 6, 2017 – Vol. 15, Issue 44

QUOTATION OF THE WEEK…”The only place where success comes before work is in the dictionary.” –Vidal Sassoon, British and American hairstylist, businessman and philanthropist

INFO THAT HITS US WHERE WE LIVE… In spite of rising home prices in many markets, homes remain affordable. A report from the Urban Institute highlighted its housing affordability index, which measures median household income against a standard mortgage for a median-priced home. It found that the median household today can afford a house that’s $70,000 above the median price. The First American Real House Price Index, which factors home prices, interest rates and income, found real home prices are 38.4% below the 2006 peak. Their chief economist confirmed, “affordability…remains high by historic standards.”
More folks are indeed finding homes affordable. The Census Bureau reports the homeownership rate rose in Q3 to its highest level since 2014. It’s now risen for several quarters, so it looks like growth is back. What’s definitely back is the American Dream. Now 82% of Americans “say they have achieved the American Dream or are on their way to achieving it,” according to the Pew Research Center, a nonpartisan fact tank subsidiary of The Pew Charitable Trusts. Three years ago, CNN’s American Dream project reported 60% of the country believed the American Dream was unattainable.

BUSINESS TIP OF THE WEEK… Experts say that being successful requires being fully committed. You need to be ready, willing and able to do whatever it takes, for as long as it takes, to reach your goals.

>> Review of Last Week
BREAKING RECORDS. AGAIN…. We watch Wall Street because the stock market is a reliable forward-looking indicator of the economy–and as the economy goes, so goes jobs, wages and the housing market. So we’re happy to report that last week, once again, all three major stock indexes set new records. It was the eighth straight weekly gain for the Dow and S&P 500, while the Nasdaq’s 63rd record close this year was the most in any calendar year. Ever. The ISM Index showed manufacturing activity slowing, but at 58.7, it’s still, at well above 50, expanding at a healthy rate. Other economic news was even better.
Inflation was up 0.1% in September and 1.3% annually, well below the Fed’s 2% target. The Fed met, didn’t hike, but hinted they might soon, because “the labor market has continued to strengthen and…economic activity has been rising at a solid rate despite hurricane-related disruptions.” Hurricanes disrupted the October jobs report, with a lower-than-forecast 261,000 new Nonfarm Payrolls and no wage growth. Yet prior month revisions netted 351,000 new jobs, and the 4.1% Unemployment Rate was the lowest since 2000. ISM Services hit 60.1, its highest level in 12 years, corresponding to 4.3% growth in real GDP.
The week ended with the Dow UP 0.4%, to 23516; the S&P 500 UP 0.3%, to 2588; and the Nasdaq UP 0.9%, to 6764.
Bond traders focused on the lower-than-expected October jobs numbers and sent prices up. The 30YR FNMA 4.0% bond we watch finished the week UP .25, at $105.06. National average 30-year fixed mortgage rates didn’t budge in Freddie Mac’s Primary Mortgage Market Survey for the week ending November 2. This followed their uptick the week before. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?… By 2030, more than one in five Americans will be a senior. As 75 million Baby Boomers age, many will downsize from homeownership to rentals, bringing more listings to market.

>> This Week’s Forecast
JOBLESS CLAIMS LOW, CONSUMER SENTIMENT HIGH… Not much economic data on the way, a nice breather from last week’s avalanche of reports. Weekly Initial Unemployment Claims and Continuing Unemployment Claims are both forecast to be historically low. That’s probably part of the reason why the University of Michigan Consumer Sentiment read for November is forecast to be historically high.

>> 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 Nov 6 – Nov 10
Date Time (ET) Release For Consensus Prior Impact
W
Nov 8 10:30 Crude Inventories 11/04 NA -2.4M Moderate
Th
Nov 9 08:30 Initial Unemployment Claims 11/04 231K 229K Moderate
Th
Nov 9 08:30 Continuing Unemployment Claims 10/27 NA 1.884M Moderate
F
Nov 10 10:00 U. of Michigan Consumer Sentiment – Prelim Nov 100.5 100.7 Moderate
F
Nov 10 14:00 Treasury Budget Oct NA -$45.8B Moderate

>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months… The financial market sees the Fed raising the Funds Rate a quarter percent next month, but doesn’t expect another hike for the next two FOMC meetings. Note: In the lower chart, a 97% probability of change is a 97% certainty the rate will rise.
Current Fed Funds Rate: 1.00%-1.25%
After FOMC meeting on: Consensus
Dec 13 1.25%-1.50%
Jan 31 1.25%-1.50%
Mar 21 1.25%-1.50%

Probability of change from current policy:
After FOMC meeting on: Consensus
Dec 13 97%
Jan 31 100%
Mar 21 100%

Comments are closed.