INFO THAT HITS US WHERE WE LIVE... U.S. home prices were certainly knocked down for a few years there, but they've definitely gotten up now. A prominent data analytics firm reported that home prices, including distressed sales, rose 3.2% in April, up for the 14th month in a row. Compared to a year ago, prices were up 12.1%, posting their highest annual increase in more than seven years. These statisticians predicted that the annual home price gain will increase to 12.5% in May.
The chief economist at the analytics firm explained, "Increasing demand for new and existing homes, coupled with low inventory, has created a virtuous cycle for price gains." The higher demand for those new homes is reflected in new residential construction spending data from the U.S. Census Bureau of the Department of Commerce. Although flat for the month, spending for residential construction on an annual basis was up 18.3% in April.
BUSINESS TIP OF THE WEEK... Make shorter to-do lists. The goal isn't to do as many things as you can in a day, but to focus on accomplishing the things that really matter.
>>Review of Last WeekJOBS DID THE JOB... The May jobs report pushed major stock indexes to their first weekly gain in three, accomplished in a good news/bad news fashion. Good news: 175,000 jobs were added, beating expectations. Bad news: March and April numbers were revised down by 12,000, so the average monthly gain is just 155,000 jobs the last three months, well below the 237,000 monthly average we saw from November through February. Good news: investors felt the modest job gains mean the Fed will continue the bond buying program that's driving down interest rates and boosting stocks.
The last bit of bad news/good news: the unemployment rate rose to 7.6%, but this was seen as good news, because it means more people are looking for work. Got that? Earlier in the week, the data was plain old-fashioned bad news. The ISM index dropped below 50 in May, indicating manufacturing was contracting. Unit Labor Costs and Factory Orders both missed estimates. But on a slightly up note, the Fed's Beige Book averred, "Overall economic activity increased at a modest to moderate pace since the previous report." We'll take that.
The week ended with the Dow up 0.9%, to 15248; the S&P 500 up 0.8%, to 1643; and the Nasdaq up 0.4%, to 3469.
Friday's jobs report sent investors scurrying over to stocks, which hurt bond prices. But bonds had been boosted by weak economic data earlier in the week, so the price dips weren't all that bad in the end. The FNMA 3.5% bond we watch ended the week down .15, at $103.06. National average mortgage rates edged up again in Freddie Mac's weekly Primary Mortgage Market Survey, but remain attractive. The Mortgage Bankers Association reported applications for purchase loans down 2% for the week, but up 14% on an annual basis.
DID YOU KNOW?... This week's Federal Budget reports the amount that the government's expenditures exceeded its tax revenues during May. The difference is made up by borrowing from the public through issuing debt in the form of Treasury bonds.
>>This Week’s ForecastMORE ACTION IN STORES AND FACTORIES, INFLATION OK... We'll all be watching Retail Sales, always a good measure of the consumer's economic outlook. Analysts expect these numbers to rise for May, a good sign. Factories are also expected to come in a little busier for May, with Industrial Production up for the month.
From the Fed on down to the ordinary citizen, everyone's keeping an eye on inflation. The May Producer Price Index (PPI) and Core PPI reading are forecast to show that the prices businesses pay for things are staying well within Fed guidelines.
>> The Week’s Economic Indicator CalendarWeaker 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 June 10 – June 14
|08:30||Initial Unemployment Claims||6/8||345K||346K||Moderate|
|08:30||Continuing Unemployment Claims||6/1||2.973M||2.952M||Moderate|
|08:30||Producer Price Index (PPI)||May||0.1%||–0.7%||Moderate|
|09:55||Univ. of Michigan Consumer Sentiment||Jun||83.0||84.5||Moderate|
>> Federal Reserve WatchForecasting Federal Reserve policy changes in coming months... Virtually all economists expect the Fed to keep the Funds Rate at its super low level at the FOMC meeting next week. The Fed says the rate won't rise until unemployment falls to 6.5%. 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|
Probability of change from current policy:
|After FOMC meeting on:||Consensus|
|Jun 19||<1 span="">1>|
|Jul 31||<1 span="">1>|
|Sep 18||<1 span="">1>|
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