Consumer Price Index (CPI): Prices are going up, but not very much. Both the overall and core categories were up 0.2% in October, matching the overall rate of change for the year. Taking out food and energy, prices were up 1.9%. Medical care had a big jump, up 0.7% and 3.0% on the year. Education and communication costs were up 0.3%. The cost of vacations is also rising a bit, with airfare prices up 1.5% and the cost of lodging away from home up 0.8%. The price of houses only rose 0.2%. Energy prices also made a bit of a comeback, up 0.3%. These prices are still down 17% year on year, being dragged down quite a bit by gasoline.
Industrial Production: Industrial production was down 0.2%, but the weaknesses were in utilities, which fell 2.5% in October, and mining, down 1.5%. Manufacturing was actually up 0.4% from September. This was helped by motor vehicle production, which was up 0.7% and 10.9% on the year. Production in high-tech industries rose by the same number. Production of business equipment was up 0.2%. The lone negative was a 0.1% dip in the production of consumer goods. Still, production in this category is up 3.5% on the year. Factories are utilizing 77.5% of their capacity.
Housing Market Index: Homebuilders were less confident in the housing market in November, as the survey of homebuilders fell three points to 62. Future sales saw a five point decline to 70. Present sales were down three points to 67. In a positive, there was a one point increase in the measurement tracking the amount of prospective buyers looking at new homes. This came in at 48, bringing it closer to breaking out of contraction. Looking at the individual regions, the strongest market is the West, coming in at 77. The South is next at 62. The Midwest and North trailed well behind at 59 and 52, respectively.
MBA Mortgage Applications: Mortgage applications were up 6.2% last week, with purchases rising 12.0% and refinances up 2.0%. The average rate for a 30-year fixed mortgage was up six basis points to 4.18%. It looks like the market has started to price in the Fed’s expected hike of short-term interest rates in December.
Housing Starts: Housing starts were down 11.0% in October to a seasonally adjusted annual rate of 1.060 million. This was primarily due to multi-family starts falling 25.0% to 338,000 annually. Single-family starts were down 2.4% for an annual rate of 722,000. The good news is that the permits were up 4.1% to an annual rate of 1.150 million. Single-family permits rose 2.4% to 711,000. Multi-family permits are up 6.8% to 439,000 on an annual basis.
Jobless Claims: Initial claims were down 5,000 to 271,000. Meanwhile, the four-week average was up 3,000 to 270,750. Continuing claims were down 2,000 to 2.175 million. The four-week average was up 750, coming in at 2.167 million.
Rates were very slightly down this week.
30-year fixed-rate mortgages (FRMs) averaged 3.97% with an average 0.6 point for the week ending November 19, 2015, down from last week when they averaged 3.98%. A year ago at this time, 30-year FRMs averaged 3.99%.
15-year FRMs this week averaged 3.18% with an average 0.5 point, down from last week when they averaged 3.20%. A year ago at this time, 15-year FRMs averaged 3.17%.
5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 2.98% this week with an average 0.5 point, down from last week when they averaged 3.03%. A year ago, 5-year ARMs averaged 3.01%.
1-year Treasury-indexed ARMs averaged 2.64% this week with an average 0.3 point, down from 2.65% last week. At this time last year, 1-year ARM averaged 2.44%.
The message the market took from the Fed minutes was that the board expects to raise rates, but it will do so very slowly. This made the market very happy going into this week’s shortened trading week. The S&P 500 had its best week in over a year.
The Dow Jones Industrial Average was up 91.06 points to 17,823.81, finishing a week in which it was up 3.35%. The S&P 500 was up 7.93 points at Friday’s close to finish at 2,089.17. The weekly gain was 3.27%. The NASDAQ closed at 5,104.92 following a 31.28 point gain on Friday. The market gained 3.59% week to week.
The Week Ahead
Monday, November 23
Existing Home Sales (10:00 a.m. ET) – Existing Home Sales tallies 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.
Tuesday, November 24
GDP (8:30 a.m. ET) – This measures the monetary value of all final goods and services produced within the U.S. This report is released on a quarterly basis.
S&P Case-Shiller HPI (9:00 a.m. ET) – The S&P Case-Shiller home pricing index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S.
Consumer Confidence (10:00 a.m. ET) – The Conference Board compiles a survey of consumer attitudes on the economy. The headline Consumer Confidence Index is based on consumer perceptions of current business and employment conditions, as well as their expectations when considering business conditions, employment and income.
Wednesday, November 25
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.
Durable Goods Orders (8:30 a.m. ET) – Durable goods orders are based on the new orders placed with domestic manufacturers for factory hard goods.
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 smooths out weekly volatility.
Personal Income and Outlays (8:30 a.m. ET) – This measures all possible income sources as well as expenditures of the public.
FHFA House Price Index (9:00 a.m. ET) – The Federal Housing Finance Agency (FHFA) House Price Index (HPI) covers single-family housing using data provided by Fannie Mae and Freddie Mac. The HPI was derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac.
New Home Sales (10:00 a.m. ET) – New home sales measure the number of newly constructed homes with a committed sale during the month.
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.
Thursday, November 26
The markets are closed for Thanksgiving. Enjoy your family and friends and eat lots of turkey or Tofurkey.
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