There were several big reports that came out at the close of last week. Let’s take a quick run through them because it’s the first full slate of Major League Baseball action and I wouldn’t blame you if your head was elsewhere. Speaking of baseball, several major economic reports from last week were real home runs.
International Trade in Goods: The nation’s goods deficit was down $4.0 billion to $64.8 billion in February. This was due to a 2.1% drop in the number of imports, which totaled $191.6 billion. Imports for both consumer goods and vehicles were down where they had been high in January. Exports also fell 0.1% to $126.8 billion. Exports of industrial supplies were down, as were capital goods and food exports. Wholesale and retail inventories were up 0.4%.
S&P Corelogic Case-Shiller HPI: Unlike last week’s FHFA index, the S&P number shows that prices rose 0.9% in January across the 20-city index. When seasonal adjustment is taken out, home prices are up 0.2%. They’ve risen 5.7% on the year overall. Much strength is in cities where values had previously been lagging behind the national average. Chicago is up 1.3%, while New York and Washington D.C. rose 0.7% and 1.0%, respectively. The market continues to be hottest out West, where Seattle is leading the way with prices appreciating 11.2% for the year. Portland home prices have risen 9.6% and Denver is up 9.2% annually.
Consumer Confidence: Consumer confidence was sky high for March, up 9.5 points from February to 125.6. A big portion of this gain comes from expectations. At 113.8, the levels haven’t been that high since September 2000. On the present situation side, consumers are positively euphoric with the number coming in at 143.1 in the best reading since August 2001. Fewer Americans think jobs are hard to get right now with the number coming in at 19.5%. Even better, nearly 5% more Americans think jobs are plentiful, with this reading coming in at 31.7%. More Americans also see their incomes rising over the next few months. In one negative, inflation expectations are down 0.2% to 4.6%.
MBA Mortgage Applications: Mortgage applications were down 0.8% overall. Purchase applications were up 1.0% on the week and refinance applications were down 3.0%. Rates fell 13 basis points to 4.33%.
Pending Home Sales Index: Pending home sales were up 5.5% in February to come in at 112.3, according to new numbers released by the National Association of REALTORS. The year-on-year rate for the index is up 2.6% overall. Of particular note, homes under contract were up 11.4% in the Midwest in February.
Gross Domestic Product (GDP): GDP grew at a rate of 2.1% in the final estimate of fourth-quarter 2016. Service spending came in at 2.4% vs. 1.8% in previous estimates. Spending on durables was at 11.4%, down 0.1% from the prior estimate. However, nondurables were up 0.5% to 3.3%. There was a $3.4 billion increase in inventories to $49.6 billion. Although this contributes positively to GDP, output and hiring may slow in the first quarter. Nonresidential investment was down 0.4% to 1.3%. Residential investment was up over 9%.
Jobless Claims: Initial claims were down 3,000 last week to 258,000. On the downside, the four-week average was up 7,750 at 254,250. Continuing claims were mixed, up 65,000 to 2.052 million. On the other hand, the four-week average is down 1,250 to come in at 2.031 million.
Personal Income and Outlays: Personal incomes were up 0.4% in February. Unfortunately, spending was on the south side, up just 0.1%, which matched overall price increases. Prices were up 0.2% in core categories. Inflation in these categories is up 2.1% and 1.8% on the year, respectively.
Consumer Sentiment: In contrast to the consumer confidence report, the consumer sentiment report from the University of Michigan came in 0.7 points lower at 96.9. The current conditions component was up 1.7 points to 113.2. However, expectations were unchanged at 86.5. Inflation expectations were down 0.2% over the next year to 2.5%. The five-year outlook is down 0.1% to 2.4%. What’s odd about this is that gas prices have been higher recently. There’s also still quite a bit of polarization between Democrats and Republicans. Republicans appear more confident than Democrats.
Mortgage rates were down again last week. We say this a lot, but the honest truth is, it’s a great time to lock your rate right now. You never know what’s going to happen in the coming days.
This week, 30-year fixed-rate mortgages (FRMs) averaged 4.14% with an average 0.5 point for the week ending March 30, 2017, down from last week when they averaged 4.23%. A year ago at this time, 30-year FRMs averaged 3.71%.
On the shorter-term side, 15-year FRMs this week averaged 3.39% with an average 0.4 point, down from last week when they averaged 3.44%. A year ago at this time, 15-year FRMs averaged 2.98%.
Finally, five-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.18% this week with an average 0.4 point, down from last week when they averaged 3.24%. A year ago, 5-year ARMs averaged 2.90%.
The market was down on Friday, but the NASDAQ had its best quarterly performance since 2013. In fact, all three indexes had gains of 4.6% or more in the first quarter.
The Dow Jones Industrial Average was down 65.27 points to close at 20,663.22. Despite this, it was up 0.32% for the week. The S&P 500 closed at 2,362.72. This was down 5.34 points on the day, but the market was up 0.80% for the week. Finally, the NASDAQ closed up 1.42% since last Friday’s close. It finished at 5,911.74 after being down just 2.61 points for the trading session.
The Week Ahead
Monday, April 3
ISM Manufacturing Index (10:00 a.m.) – This index measures the general direction of manufacturing within the U.S. The qualitative survey of purchasing managers looks at production, new orders, order backlogs, inventories and supplier deliveries, among other factors.
Tuesday, April 4
International Trade (8:30 a.m. ET) – International trade is composed of merchandise (tangible goods) and services. It’s available by export, import and trade balance for six principal end-use commodity categories and for more than 100 principal Standard International Trade Classification system commodity groupings.
Wednesday, April 5
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Thursday, April 6
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smooths out weekly volatility.
Friday, April 7
Employment Situation (8:30 a.m. ET) – The employment situation report measures unemployment in the labor force as well as the sentiments of workers about the job market.
There’s not a lot going on in the middle of this week, but we get two big ones in terms of important economic data on Monday and Friday. We’ll have it all for you next Monday.
If you’re in a place where you’d rather be thinking about green outfield grass and hot dogs than mortgages, check out our post on the economic impact of the World Series . We have plenty of home, money and lifestyle content to share with you if you subscribe to the Zing Blog below.
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