It’s mid-March, and you can just feel the madness in the air. Yeah, there’s a big basketball tournament about to start, but there’s just as much anticipation in the markets for the Federal Reserve decision on short-term interest rates Wednesday afternoon.
It’s expected that rates move up at least a quarter point Wednesday, but if the Fed says anything that gives us clues as to their future plans, the market could be in for some big surprises. Let’s just hope there aren’t too many upsets.
International Trade: The national trade deficit was $4.2 billion higher to come in at $48.5 billion in January. The increase is being blamed on more imports of consumer goods and vehicles as well as higher oil prices. Exports were up 0.6% at $128.0 billion. Industrial supplies saw a 0.6% gain. Vehicle exports were also up 1.3% to $13.6 billion and food exports were up $600 million. However, imports were up 2.3% to $197.6 billion. Consumer goods imports were up 2.4% to $52.1 billion. Oil imports were up to $15.3 billion, an increase of 19%. There is both more oil being imported and higher prices. The price per barrel was $43.94, up almost $2.50 from December.
MBA Mortgage Applications: The average rate on a 30-year fixed-rate conforming mortgage was up six basis points last week to 4.36%. However, this did nothing to deter applications, which were up 3.3% overall. Purchase applications were up 2.0% with the refinance side rising 5.0%.
Jobless Claims: Initial claims rose 20,000 last week to 243,000. This pushed the four-week average up slightly, increasing by 2,250 to come in at 236,500. On the continuing claims side, they fell 6,000 to 2.058 million. The four-week average fell by the same amount to 2.066 million.
Employment Situation: Nonfarm payrolls were up to 235,000, which beat consensus expectations. The unemployment rate was also down one-tenth of a point to 4.7%. Private payrolls added 227,000 jobs, while the government added 8,000 jobs. The participation rate was also up 0.1% to 63.0%. Employees also made more money, as this was up 0.2%. The average workweek held steady at 34 hours, 24 minutes. Hiring in the retail sector was down 26,000. However, construction added 58,000 jobs to go along with 28,000 jobs created in manufacturing. There was also a strong gain of 37,000 jobs added in professional and business services. January was also upwardly revised, with 11,000 jobs added.
Mortgage rates hit 2017 highs. However, it’s worth noting that it’s still a great time to lock your rate because the Federal Reserve will most likely be raising short-term interest rates this week. When that happens, mortgage rates may also push up.
Turning to the data, 30-year fixed-rate mortgages (FRMs) averaged 4.21% with an average 0.5 point for the week ending March 9, 2017, up from last week when they averaged 4.10%. A year ago at this time, 30-year FRMs averaged 3.68%.
Looking at shorter terms, 15-year FRMs this week averaged 3.42% with an average 0.5 point, up from last week when they averaged 3.32%. A year ago at this time, 15-year FRMs averaged 2.96%.
Finally, 5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.23% this week with an average 0.4 point, up from last week when they averaged 3.14%. A year ago, 5-year ARMs averaged 2.92%.
The stock market was up Friday following a strong employment report. However, all of the major indexes had multiweek winning streaks broken.
The Dow Jones Industrial Average rose 44.79 points to close at 20,902.98, down 0.49% on the week. The S&P 500 finished the day at 2,372.60, up 7.73 points on the day and 0.44% on the week. The NASDAQ was also down 0.15% on the week, but up 22.92 points on the day to close at 5,861.73.
The Week Ahead
Tuesday, March 14
Producer Price Index (PPI) (8:30 a.m. ET) – The Producer Price Index measures the average change over time in prices received by domestic producers for the sale of goods and services.
Quicken Loans Home Price Perception Index (HPPI) (10:00 a.m. ET) – Quicken Loans, the nation’s second-largest retail mortgage lender, releases data every month comparing what people think their homes are worth through appraisals. Similar opinions of value often make for smoother purchase and refinance transactions.
Quicken Loans Home Value Index (HVI) (10:00 a.m. ET) – Quicken Loans also releases data on home values, both on the national and regional level. Homeowners can gain a perception of whether values are increasing or decreasing, and get a better idea of where they stand in terms of equity.
Wednesday, March 15
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.
Consumer Price Index (8:30 a.m. ET) – The consumer price index measures changes based on the price of a fixed basket of goods and services purchased by consumers.
Retail Sales (8:30 a.m. ET) – Retail sales measure total receipts from stores selling merchandise and related services to final consumers. Sales are measured by retail and food service stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Census Bureau.
Housing Market Index (10:00 a.m. ET) – The National Association of Home Builders produces a housing market index based on a survey where respondents from the organization are asked to rate the general economy and housing market conditions. The index is a weighted average of separate diffusion indexes, including present sales of new homes, sales of new homes expected in the next six months and traffic of prospective buyers in new homes.
Thursday, March 16
Housing Starts (8:30 a.m. ET) – A housing start is registered when the construction of a new residential building begins. The start of construction is defined as the beginning of excavation of the foundation for the building.
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, March 17
Industrial Production (9:15 a.m. ET) – The Federal Reserve’s monthly index of industrial production – and the related capacity indexes and capacity utilization rates – covers manufacturing, mining, and electric and gas utilities.
Consumer Sentiment (10:00 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.
It’s going to be quite a busy week. Strap in. After basketball this weekend, we’ll pick up the dribble and have all the economic scores for you.
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