News for Prescott AZ - AmericanTowns.com

Monday, August 31, 2009

Inside Lending Newsletter From Theron Wall

 

For the week of August 31, 2009 – Vol. 7, Issue 35

>> Home Base

INFO THAT HITS US WHERE WE LIVE  We continue to see signs of improvement in the housing market and last week showed us a surprising 9.6% increase in new single-family home sales for July. This was their steepest percent rise since 2005. New home sales are now at a 433,000 annual rate, up 31.6% from their January low. Even more significantly, inventory of unsold new homes plummeted to a 7.5 month supply from their 8.5 month level in June. This put inventories at 271,000, down over 52% from their mid-2006 peak, and at their lowest level since 1993. New home sales have now been up 4 months in a row, increasing since March at an annualized rate of more than 121%!

Prior to this good news, the Case-Shiller home price index reported a quarterly rise in prices for the first time in three years. The index also posted its second straight monthly increase, up 1.4% for the 20 metro areas it tracks. The Federal Housing Finance Agency's purchase-only index had home prices up 0.5% in June following a 0.6% rise in May. The FHFA index is up 0.5% for the first six months this year. Agency chief Edward J. DeMarco said: "This is further evidence that prices may be stabilizing for the nation as a whole."

Finally, the Mortgage Bankers Association reported mortgage applications for home purchases were up 1.0% last week over the week before. This was the fourth consecutive weekly gain for home-purchase applications.

>> Review of Last Week

UP A LITTLE MORE... The Dow went up eight days in a row before it slipped just 36 points on Friday. This was the venerable index's longest uninterrupted advance in over two years and, despite the small drop on Friday, it was still UP 0.4% for the week!

Tuesday saw consumer confidence come in at 54.1, way higher than the previous 47.4 reading. And Friday, the University of Michigan consumer sentiment for August hit 65.7, up nicely sfrom last month's 63.2. We also had durable goods orders up a healthy 4.9% for July. For the past three months there have been gains in these orders that are now showing up as increased shipments, which will boost Q3 GDP. As far as Q2 GDP is concerned, last week's preliminary reading was unchanged from the advanced reading of –1.0% and better than the expected –1.5%. This was helped by a consumer spending decline that was smaller than anticipated. Yay!

Please note that corporate profits in Q2 grew at an annual rate of 24.9%, following their 22.8% growth rate in Q1. And all the Q2 profit growth came from US operations, not revenues earned overseas. Some analysts feel it won't be long before these profits go into more US business investment and hiring. New claims for unemployment insurance dropped by 10,000 and continuing claims fell by 119,000. Finally, President Obama nominated Ben Bernanke for a second term as Fed Chairman, a move investors expected.

For the week, the Dow was UP 0.4%, to 9544.20; the S&P 500 inched UP 0.3%, to 1028.93; while the Nasdaq ended UP 0.4%, to 2028.77.

Bond prices did pretty well for the week, in spite of the big auction offerings that could have depressed prices but didn't. In fact, the price of the FNMA 30-year 4.5% bond we follow edged up from the previous week's $99.69 close, ending at $100.19. Mortgage interest rates were up slightly for the week, but still well within the historically low levels they've been at all year.

>> This Week's Forecast

THE FACTORIES, THE FED, THE JOBS... Well, the start of the week features two good looks at the state of manufacturing, with the Chicago PMI and the ISM Index. Midweek, the FOMC Minutes should shed some light on the Fed's view of the economy at their last meeting. Then the week ends big with the August employment report. Many economic indicators are now picking up, but the jobs picture is always the last to brighten. Will we see some glimmers in the data?

>> 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 August 31 – September 4

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

M
Aug 31

09:45

Chicago PMI

Aug

47.2

43.4

HIGH

Tu
Sep 1

10:00

ISM Index

Aug

50.2

48.9

HIGH

W
Sep 2

08:30

Productivity–Rev.

Q2

6.1%

6.4%

Moderate

W
Sep 2

10:30

Crude Inventories

8/28

NA

+128K

Moderate

W
Sep 2

14:00

FOMC Minutes

8/12

NA

NA

HIGH

Th
Sep 3

08:30

Initial Jobless Claims

8/29

570K

570K

Moderate

Th
Sep 3

10:00

ISM Services

Aug

48.0

46.4

Moderate

F
Sep 4

08:30

Average Workweek

Aug

33.1

33.1

HIGH

F
Sep 4

08:30

Hourly Earnings

Aug

0.1%

0.2%

HIGH

F
Sep 4

08:30

Nonfarm Payrolls

Aug

–225K

–247K

HIGH

F
Sep 4

08:30

Unemployment Rate

Aug

9.5%

9.4%

HIGH

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months. Virtually all economists feel there's very little chance the Fed will be raising the funds rate any time soon. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:

Consensus

Sep 23

0%–0.25%

Nov 4

0%–0.25%


Probability of change from current policy:

After FOMC meeting on:

Consensus

Sep 23

1%

Nov 4

3%

 

This e-mail is an advertisement for Theron Wall. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is copyrighted by Wallick & Volk Mortgage and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of Wallick & Volk Mortgage.

.
Equal Housing Lender

 

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