Jobless Claims Reach Highest Point Since Early October – Market Update

Quicken Loans Market Update - Zing Blog

Headline News from the Last Week

  • Jobless Claims – There was a 68,000 jump in initial claims to 368,000, according to data for the December 7 week. Claims are back to their highest point since the government shutdown in early October.
  • Retail Sales – The holiday season is turning out to be better than expected for retailers. Overall retail sales in November jumped 0.7%, following a rise of 0.6% the month before (originally up 0.4%). Analysts forecast a 0.6% surge.
  • Producer Price Index (PPI) – The November PPI edged down 0.1%, following a decline of 0.2% in October. Market expectations were for a 0.1% decrease. The core rate, which excludes both food and energy, eased to a 0.1% rise after gaining 0.2% in October.
  • The Federal Reserve’s report on the financial accounts of the United States showed a rise in household net worth as a percentage of disposable income to 614.7%, a post-recession high.
  • Stanley Fischer is reported to be nominated as vice chair of the Federal Reserve, according to Bloomberg News. The report indicates that the Obama administration has offered the position to Fischer, who subsequently accepted the offer.
  • Bond investors are expecting the Federal Reserve to lose its battle against disinflation despite flooding the U.S. economy with more than $3 trillion in the past five years.
  • With Fed chairman Ben Bernanke’s term set to expire at the end of January, Janet Yellen – the Fed’s second in command – almost certainly will be confirmed by the Senate this week as Bernanke’s successor. It will mark only the second time in the central bank’s history that its leaders have overlapped.
  • While home prices and sales are working their way back to normal, employment among young adults remains sluggish. With young adult employment (ages 25-34) one of the five market indicators in the Trulia Housing Barometer, full housing recovery hinges on young adults getting jobs.
  • U.S. manufacturing rose for the fourth consecutive month in November as production increased nearly across the board.
  • General Motors Co. announced it will invest nearly $1.3 billion at five U.S. plants to make a new transmission and boost output for a planned new engine as well as add a vehicle paint shop.
  • Supporters of a budget agreement worked during the weekend to secure the necessary votes in the Senate to approve the two-year deal, which is expected to pass.

Mortgage Rates

According to the weekly Primary Mortgage Market Survey, rates barely changed from the previous week amid light economic data releases.

30-year fixed-rate mortgage (FRM) averaged 4.42% with an average 0.7 point for the week ending December 12, 2013, down from last week when it averaged 4.46%. A year ago at this time, the 30-year FRM averaged 3.32%.

15-year FRM this week averaged 3.43% with an average 0.7 point, down from last week when it averaged 3.47%. A year ago at this time, the 15-year FRM averaged 2.66%.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.94% this week with an average 0.4 point, down from last week when it averaged 2.99%. A year ago, the 5-year ARM averaged 2.70%.

1-year Treasury-indexed ARM averaged 2.51% this week with an average 0.4 point, down from last week when it averaged 2.59%. At this time last year, the 1-year ARM averaged 2.53%.

Equity Markets

The S&P 500 decreased 1.7%, its biggest decline since August 30, while the Dow Jones Industrial Average rose 143.69 points, or 0.9%, to 15,899.05.

The Week Ahead

Tuesday, December 17:

Consumer Price Index (8:30 a.m. ET) – The Consumer Price Index is a measure of the change in the average price level of a fixed basket of goods and services purchased by consumers.

Wednesday, December 18:

Housing Starts (8:30 a.m. ET) – A housing start is registered at the start of construction of a new building intended primarily as a residential building. The start of construction is defined as the beginning of excavation of the foundation for the building.

FOMC Meeting Announcement (2 p.m. ET) – The Federal Open Market Committee (FOMC) is the policy-making arm of the Federal Reserve. It determines short-term interest rates in the U.S. when it decides the overnight rate that banks pay each other for borrowing reserves when a bank has a shortfall in required reserves.

Chairman Press Conference (2:30 p.m. ET) – The Fed announced on March 24, 2011 that Fed Chairman Ben Bernanke will hold press briefings four times a year to explain the FOMC’s latest quarterly economic projections. Additionally, the purpose of the briefings is to provide additional context for the FOMC’s policy decisions and to allow for Q&A with the press.

Thursday, December 19:

Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smoothes out weekly volatility.

Existing Home Sales (10 a.m. ET) – Existing home sales tally the number of previously constructed homes, condominiums and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends.

Friday, December 20:

Gross Domestic Product (GDP) (8:30 a.m. ET) – GDP is the broadest measure of aggregate economic activity and encompasses every sector of the economy.

Visit the Quicken Loans Zing Blog for updated information on important economic releases that affect your wallet.

 

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