- FOMC Minutes – The latest FOMC meeting saw plenty of debate about when to taper asset purchases and how fast to taper. At the December 17–18 meeting, most participants saw tapering just after the meeting as appropriate. However, other participants did not want taper yet as unemployment was seen as still elevated.
- Consumer Credit – Consumer credit rose $12.3 billion in November, which is under the Econoday consensus for $14.2 billion, but still a solid gain. Details show a rare back-to-back gain for revolving credit, up a modest $0.5 billion but following a $4 billion gain in October which was the third largest gain of the whole recovery. The last time revolving credit rose two months in a row was back in January and February of last year.
- Jobless Claims – Initial jobless claims fell 15,000 in the January 4 holiday week to 330,000, which is 1,000 below the Econoday consensus. But in an offset, the prior week is now revised 6,000 higher to 345,000. Though the 4-week average is down a sharp 9,750 to 349,000, it is still trending nearly 20,000 higher than the month-ago comparison.
- Employment Situation – Not tapering is likely back on the Fed’s table for the next policy meeting. Total payroll jobs in December grew a meager 74,000, following a revised increase of 241,000 for November (originally up 203,000) and after a revised gain of 200,000 for October. Expectations were for a 200,000 increase. The net revisions for October and November were up 38,000.
According to the Primary Mortgage Market Survey released by Freddie Mac, average mortgage rates changed little amid a week of light economic reports.
30-year fixed-rate mortgages (FRM) averaged 4.51% with an average 0.7 point for the week ending January 9, 2014, down from last week when it averaged 4.53%. A year ago at this time, the 30-year FRM averaged 3.40%.
15-year FRM this week averaged 3.56% with an average 0.6 point, up from last week when it averaged 3.55%. A year ago at this time, the 15-year FRM averaged 2.66%.
5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 3.15% this week with an average 0.4 point, up from last week when it averaged 3.05%. A year ago, the 5-year ARM averaged 2.67%.
1-year Treasury-indexed ARM averaged 2.56% this week with an average 0.5 point, unchanged from last week. At this time last year, the 1-year ARM averaged 2.60%.
The jobs report was the most noteworthy release of the week. The economy added only 74,000 jobs in December, well below the 193,000 that economists had forecasted. With the weak report, stocks were up and down. The Dow Jones Industrial Average dropped -0.4%, while the S&P 500 finished the week up 0.3%. The NASDAQ finished up 0.6%.
The Week Ahead
Tuesday, January 14
Retail Sales (8:30 a.m. ET) – Retail sales measure the total receipts at stores that sell merchandise and related services to final consumers. Sales are by retail and food services stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Bureau of the Census.
Wednesday, January 15
Producer Price Index (8:30 a.m. ET) – The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measures the average change over time in the prices received by domestic producers of goods and services.
Thursday, January 16
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.
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 trend suggests a deteriorating labor market. The four-week moving average of new claims smoothes out weekly volatility.
Housing Market Index (10 a.m. ET) – The National Association of Home Builders produces a housing market index based on a survey in which respondents from this organization are asked to rate the general economy and housing market conditions. The Housing Market Index is a weighted average of separate diffusion indexes: present sales of new homes, sale of new homes expected in the next six months, and traffic of prospective buyers in new homes.
Friday, January 17
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.
Consumer Sentiment (9:55 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.
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