As a baseball fan in Detroit, I can’t help but feel that my team is participating in a race to the bottom right now. They gave me so much hope earlier in the year, and now that the rubber is meeting in the road, it’s just not coming together. There’s always next year.
The other place that seems to be a race to the bottom right now is the stock market, and particularly the Nasdaq, with no clear explanation other than some of that 2020 chaos.
Analysis for this week’s report was gathered with the assistance of Econoday.1 Let’s get into what happened!
MBA Mortgage Applications
Mortgage applications were up 2.9% overall last week. This included a 3% increase in refinance applications and a matching increase on the purchase side.
When looking at these numbers on a year-to-year basis, we get an idea of just how hot the market has been. Refinance applications were up 60% from a year ago and increased 40% in the purchase market.
The average rate on a conforming 30-year fixed mortgage was down a single basis point to 3.07%. On the jumbo side, the rate was also down 1 basis point to 3.4 for a 30-year fixed loan.
On a seasonally adjusted basis, initial claims for unemployment last week were unchanged at 884,000. The 4-week average was down 21,750, settling at 970,750.
On an unadjusted basis, those filing for traditional unemployment filed 20,140 more claims last week, settling at 857,148.
On the continuing claims side, these were up 93,000 to 13.385 million. The 4-week average of seasonally adjusted continuing claims was down 523,750 to 13.982 million. The unemployment rate was up 0.1% to 9.2%.
Meanwhile, when removing the seasonal adjustment, the unemployment rate remained at 9%. Overall continuing claims were up 54,472 at about 13.197 million.
Producer Price Index (PPI)
On the producer side, prices were up 0.3% for the month of August. They’ve still fallen 0.2% since the same time a year ago. When food and energy were taken out, prices are up 0.4% on the month and 0.6% year-to-year. Finally, when further excluding trade services, prices were up 0.3% in August as well as the same time a year ago.
When jumping into the categories, trade services were up 1.2%. These represent wholesale and retail margins. Meanwhile, food was down 0.2% and is up only 0.2% on the year. Meanwhile, energy prices fell 0.1% and 12.4% compared to last August.
Finally, passenger transport prices are down 3.2% and have fallen 16.7% compared with the same time a year ago.
Consumer Price Index (CPI)
On the consumer side, prices were up 0.4% in the month of August and 1.3% since the same time a year ago. This number held even when food and energy were taken out. Without these two categories, inflation would be up 1.7% since last August.
A big reason for price buildup included a 5.4% increase in used vehicle prices, despite the fact that new-vehicle prices were flat.
Other readings weren’t quite as high. The price of airfare was up 1.2%, while energy was up 0.9% and the price of clothing rose 0.6%. Car maintenance and repair prices were up 0.6%, with car insurance costs drifting 0.5% higher.
On the softer side, the cost of shelter, medical services and food were all up just 0.1%. Transportation services were flat.
Mortgage rates fell to record lows last week. A strong argument could be made that there’s never been a better time to get a mortgage, whether you’re looking to purchase or refi.
If you feel you might be ready, feel free to speak with one of our Home Loan Experts to go over your options.
The average rate on a 30-year fixed mortgage with 0.8 points paid in fees fell 7 basis points to 2.86%. This has fallen from 3.56% at the same time a year ago.
Looking at shorter terms, the average rate for a 15-year fixed mortgage with 0.7 points paid fell 5 basis points at 2.37% and dropped from 3.09% last year at this time.
Finally, the average rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage was up 18 basis points to 3.11% with 0.2 points paid. This has decreased from 3.36% last year.
The Nasdaq has taken an absolute pounding recently with traders reevaluating their positions in tech stocks. There doesn’t seem to be any one thing driving this other than that the broader economic recovery is slowing. It appears that traders figure even big tech isn’t immune from some of the pain.
Apple has an announcement scheduled for Tuesday. I’m not a betting man, but I’d be willing to bet my life savings that there will be some sort of iPhone announcement made.
Whether you’re an iFanatic or not, my point would be that you can expect a market reaction given that kind of news normally. What we’ve seen recently hasn’t necessarily been rational, whether you find yourself on the optimistic or pessimistic side of the fence.
The Dow Jones Industrial Average was down 1.66% for the previous 5 days despite finishing up 131.06 points Friday to close at 27,665.64. Meanwhile, the S&P 500 was up 1.78 points Friday to close at 3,340.97, down 2.51% since last Thursday. Finally, the Nasdaq fell to 10,853.55, down 66.05 points on the day and 4.06% for the 5-day period.
The Week Ahead
Tuesday, September 15
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.
Wednesday, September 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, September 17
Housing Starts and Permits (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. A permit is an accepted application to begin construction at a later date. Both of these are leading indicators for housing supply.
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.
Friday, September 18
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.
There’s some housing news out next week, along with industrial production and retail sales, which are always big indicators. We’ll have it all covered in next week’s Market Update!
This may be some heavy reading for a Monday. We’ve got plenty of home, money and lifestyle content to share with you if you subscribe to our mailing list below. Fall is upon us and that means cutting the chill by gathering around the fire. Here’s an article on backyard fire pits. Have a great week!
1 Important Legal Notice: Econoday has attempted to verify the information contained in this calendar. However, any aspect of such information may change without notice. Econoday does not provide investment advice, and does not represent or warrant that any of the information is accurate or complete at any time. Copyright 2020 Econoday, Inc. All rights reserved.
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