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We changed the Wi-Fi router at my house last week. Let’s just say the transition was less than smooth. Everything broke and somehow in the process I ended up having to reinstall the operating system on my personal computer. We’re mostly back up and running now, but I still need a couple of key things.

It feels kind of like this trade war with China. There’s increasing evidence that the spat has thrown the entire global economy for a bit of a loop. Then on Friday, President Trump said there might be a phased trade deal in place. But stock futures are now falling on reports that China wants to talk more before signing.

Before we get there, let’s look at some of the data that’s driving key decisions for both the U.S. administration and traders.

Headline News

Producer Price Index

Prices on the producer side of things were down 0.3% on the month of September. It’s only up 1.4% overall since last September. The number is also down 0.3% when food and energy were taken out. Without these categories, inflation is up 2% on the year. When trade services were further removed, inflation in production was flat. Inflation is only up 1.7% with these categories taken out since September.

Food prices were up 0.3% on the month and have risen 2.7% on the year. Breaking this down further, food purchased by the government saw price is up 3.6%, while foods sold to consumers was up 2.6%. Finally, from being exported was up 2.7%. Meanwhile, energy prices are down 2.5% and down 8.7% on the year.

Service prices were down 0.2%, while trade services have fallen 1%. Still, in these categories, prices are up 2.2% and 3.1% since last September. Meanwhile, goods prices are down 0.4%, following a 0.5% dip in August. Goods prices are down 0.5% overall for the year.

Finally, personal consumption expenditures were down 0.3% overall and 0.2% with food and energy taken out.

Quicken Loans® Home Price Perception Index

Homeowner estimates of value came in just 0.49% higher than actual appraised values, according to September numbers. This is very low compared to previous months. This probably has something to do with a spike in home values, but we’ll get into that more below.

In terms of regional data, homeowners in the West were closest to harmony with appraisers, overvaluing their homes by just 0.45%. The other regions are really bunched up, with values coming in 0.5% high in the Northeast and overvalued by 0.51% in the Midwest and South.

Meanwhile, when looking at data at the city level, values in Boston are still very hot, coming in 1.71% higher than estimates. Meanwhile, values in Charlotte, N.C. are close behind at 1.61% above homeowner expectations. On the flip side of the coin, Chicago has overvalued its properties by 1.67% compared actual appraisals. It’s worth noting that home values are still coming in higher than homeowners think in 55% of the surveyed markets.

Quicken Loans Home Value Index

Home values were up 2.15% in September and have gone up 6.52% compared to the same time a year ago. Demand continues to be higher than the available supply apparently.

In regional data, values in the West were up 2.93% September and 5.51% on the year. Meanwhile, in the Northeast, there was an uptick of 1.53% for the month and 4.52% year-to-year. Values in the Midwest were up 1.52% in September and 6.34% compared to the same time a year ago. Finally, values were up 4.28% on the year in the South after rising 0.26% in September.

MBA Mortgage Applications

Mortgage applications were up 5.2% overall as refinance applications were up 10% on the week. This was helped by the fact that rates fell nine basis points to 3.9% for a 30-year fixed conventional mortgage.

Purchase applications were down 1% on the week, but they’ve risen 10% on the year.

Consumer Price Index

On the consumer side, inflation was flat in September. It’s only gone up 1.7% overall on the year. Most of the reason for inflation being low is that food and energy prices have been down. When these were taken out, inflation was up 0.1% for the month and has risen 2.4% since September of last year.

Food prices are up 1.8% on the year after being flat in September, but the real thing keeping inflation down is a 4.8% drop in energy prices on the year after being down 1.4% on the month. Prices at the pump were down 2.4%.

Medical care costs rose 0.2%, hospital care costs were up just a little and prescription drug costs actually fell, but services of physicians were higher. Medical care costs are up 4.4% on the year. The other big category is housing. These prices were up 0.3% on the month and 3.5% on the year. Rent was up 0.4% and the cost for owners to rent an equivalent space were up 0.3%. Other categories that were up included household furnishings and car insurance.

Prices for new and used vehicles were down on the month with communications down as well. Both used vehicles and communications prices have gone down on the year.

Jobless Claims

Claims for unemployment were mixed last week. On one hand, initial jobless claims were down 10,000 to come in at 210,000. The 4-week moving average was up 1,000 to 213,750.

Continuing claims were up 29,000, settling at 1.684 million. Finally, the 4-week moving average of continuing claims was up 2,500 at 1.665 million on the week.

Consumer Sentiment

In preliminary numbers for October, consumer sentiment beat expectations easily, coming in up 2.8 points to 96.

Much of the gain was due to a rise of almost 5 points in the current conditions’ assessment, which was up to 113.4. Expectations for the future are also 1.4 points higher at 84.8.

There was some additional detail here in that consumers are much more concerned over the ongoing General Motors workers strike than potential impeachment proceedings. The strike has entered its 5th week.

Inflation expectations over the next year are down 0.3% to 2.5% while expectations over the next 5 years were down 0.2% to 2.2% overall. This is sure to present some debate at the next Federal Reserve meeting.

Mortgage Rates

Mortgage rates fell quite a bit last week. There’s been weaker economic data in recent weeks combined with overall uncertainty on the health of the world’s economies. The only good thing is that if you’re in the market for any kind of loan, including a mortgage, it’s a really good time to lock your rate while borrowing costs are on the lower side.

The average rate for a 30-year fixed mortgage was down 8 basis points last week to 3.57% with 0.6 points paid in fees. This has dropped from 4.9% a year ago.

Meanwhile, looking at shorter terms, the average rate for a 15-year fixed mortgage fell nine basis points to 3.05% with 0.5 points. This was down from 4.29% last year.

Finally, the average rate for a 5-year, the treasury-indexed, hybrid adjustable-rate mortgage was down 3 basis points to 3.35% last week. This has fallen from 4.07% at the same time last year.

Stock Market

If you’re anything like me, you’ve given up on trying to figure out what’s going to happen between the U.S. and China. Perhaps the markets would do well to just ride the wave and not get too high or too low given any particular piece of news, at least until both sides seem to be saying the same thing. Alas, that’s probably not in the nature of the beast.

As I alluded to earlier, President Trump announced a partial trade deal that would take effect in phases. The stock markets went up quite a bit on that news. But then futures were down this morning after the Chinese pumped the brakes a bit. If there weren’t so many dollars and stakes involved, this would be quite the soap opera. I imagine traders are just hoping for a break at this point.

The Dow Jones Industrial Average was up 319.92 points Friday to finish at 26,816.59, this is up 0.91% on the week. Meanwhile, the S&P 500 was up 32.14 points on the day and 0.62% on the week after finishing at 2,970.27. Finally, the Nasdaq was up 0.93% on the week after finishing Friday at 8,057.04. This was up 106.26 points to end the week.

The Week Ahead

Monday, October 14

It’s Columbus Day. While the stock market is open, as is Quicken Loans, it’s a federal holiday, meaning the bond markets is closed, as are most banks.

Wednesday, October 16

MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This is a leading indicator for single-family home sales and housing construction.

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 (NAHB®) produces a housing market index based on a survey in which 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 6 months and traffic of prospective buyers in new homes.

Thursday, October 17

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 4-week moving average of new claims smooths out weekly volatility.

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.

The biggest report out next week is probably industrial production, but we’ll also be keeping our eye on housing starts. We’ll have it all covered in the next week’s Market Update!

If you don’t really care much for the day-to-day movements in the market and economic indicators, I can’t blame you. It’s not everyone’s cup of tea. The good news is that if you subscribe to the Zing Blog by Quicken Loans below, we’ve got plenty more home, money and lifestyle content to share with you! One thing I’m looking forward to is my team on the big Monday night game tonight. With the weather getting cooler, many of us will be spending more time on the couch watching TV. Here’s how to cut down on glare in your picture. Have a great week!

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