MBA Purchase Applications –The real headline this week was the refinance portion of this index, which was up 66.4% as lower oil prices propel a downward trend in mortgage rates. Meanwhile, applications were up 23.6% on the purchase side. Overall applications were up 49.1% for the week.
Retail Sales – Retail sales were down 0.9% for the month of December to $442.9 billion. However, this is up 3.2% over the same time last year. Total sales for the year were up 4.0% over 2013. November sales numbers were revised down from 0.7% sales growth to 0.4% growth. Meanwhile, retail trade sales were down 1.1% from November, but 2.6% above December of last year. Motor vehicle sales were up 9.8% from December of last year. Restaurant and bar sales were up 8.2% from the same period.
Jobless Claims – Initial jobless claims were up 19,000 this week to 316,000, reaching their highest levels since September. The four-week average was up 6,750 to 298,000. Analysts said this jump in initial claims could be related to the usual instability seen around the new year. Meanwhile, continuing claims fell by 51,000 in the week of January 3, bringing them to 2.424 million. The four-week average increased by 12,000 to 2.415 million. Both four-week averages are close to where they were a month ago.
Producer Price Index (PPI) – Producer prices fell in December, down 0.3%, due to a continuing trend of lower energy costs. Taking out food and energy, the PPI edged up 0.3% for the month. Final demand goods were down 1.2%, while its services counterpart was up 0.2% month-to-month. Overall, PPI is up 1.1% year-over-year.
Consumer Price Index (CPI) – Prices continued to fall because of weakness in the energy sector, declining by 0.4% in December. This represented the largest month-to-month decrease since 2008. Energy went down 4.7%, led by gasoline’s 9.4% drop. Food prices did rise 0.3%. Meanwhile, the price of shelter was up 0.2% along with healthcare, which experienced its largest gain since August 2013 at 0.5%. These were offset by declines in other areas, including apparel, airline tickets and new vehicles. Overall inflation is 0.7% year-over-year.
Industrial Production – Industrial production fell 0.1% on a dip in utilities of 7.3%. On the other hand, manufacturing gained 0.3% largely because of the drop, analysts said. Mining was up 2.2%. Durable goods were up 0.2% while nondurables increased 0.4%. Capacity utilization for this month was at 79.7%.
Consumer Sentiment – Consumer sentiment is coming on strong, up 4.6 points in the mid-January reading to 98.2. The expectations component is up 5.0 points to 91.6 in the highest level since January 2004. The current conditions component is at 108.3, reaching a level not seen since January 2007. The surge in sentiment is largely blamed on low gas prices. Inflation expectations for the next year have dropped four-tenths to 2.4%. Five-year inflation expectations remained the same at 2.8%.
Mortgage rates again fell across the board this week. They’re now at their lowest level since the spring of 2013.
30-year fixed-rate mortgages (FRMs) averaged 3.66% with an average 0.6 point for the week ending January 15, 2014, down from last week when they averaged 3.73%. A year ago at this time, the 30-year FRMs averaged 4.41%.
15-year FRMs this week averaged 2.98% with an average 0.5 point, down from last week when they averaged 3.05%. A year ago at this time, the 15-year FRMs averaged 3.45%.
5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 2.90% this week with an average 0.4 point, down from last week when they averaged 2.98%. A year ago, the 5-year ARMs averaged 3.10%.
1-year Treasury-indexed ARMs averaged 2.37% this week with an average 0.4 point, down from last week when they averaged 2.39%. At this time last year, the 1-year ARMs averaged 2.56%.
The markets rallied Friday to end a five-day streak of losses. The Dow Jones industrial average closed at 17,511.57 Friday, gaining 190.86 points. Still, it was down 1.3% from the week-ago close. The S&P 500 finished the week down 1.2% at 2,019.42 after adding 26.75 points Friday. The NASDAQ rose 63.56 points to close Friday at 4,634.38, a week-over-week fall of 1.5%.
The Week Ahead
Tuesday, January 20
Housing Market Index (10:00 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, including present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers in new homes.
Wednesday, January 21
MBA Purchase Applications (7:00 a.m. ET) – The purchase applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
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.
Thursday, January 22
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.
Friday, January 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 re-sales) account for a larger share of the market than new homes and indicate housing market trends.
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