Michigan saw its first big snow storm of the year. Like it or not, winter is officially here with a vengeance. With a lack of domestic data coming out last week, all eyes were focused on stocks. Unlike the weather, the stock market has been running pretty hot the last few weeks.
International Trade: The U.S. trade deficit was up $6.4 billion to $42.6 billion in October. Exports were down 1.8%, while imports were up 1.3%. The goods deficit was at $63.4 billion and a small rise in the services trade surplus didn’t do much to offset this with the surplus coming in at $20.8 billion. Exports for food and beverages were down $1.4 billion and industrial supplies were down $1 billion. Consumer goods exports were also down heading into the holiday season, falling $0.9 billion. Services exports were helping offset this with a $63.3 billion surplus. Imports came in at $231.3 billion, the highest total since August last year. There was a $1.1 billion increase in capital goods imports. The positive side of this is that it means more investment. There was a $2.4 billion increase in consumer goods imports as Americans began the holiday shopping push.
MBA Mortgage Applications: Mortgage applications went down again last week as rates continue to rise. The average rate on a 30-year fixed mortgage was up four basis points to 4.22%. This is the highest the rate has been in MBA data since September 2014. Applications are down 0.7% overall as refinance apps were down 1.0%. Purchases rose 0.4%.
Jobless Claims: Initial unemployment claims were down 10,000 last week to 258,000. The four-week average was up 1,000 to come in at 252,500. Continuing claims also had a good week, down 79,000 to 2.005 million. The four-week moving average was down 9,500 at 2.029 million.
Consumer Sentiment: Consumers are feeling pretty good in the initial reading for December. The sentiment index reads 98.0. That’s an increase of 4.2 points over November’s final reading. Expectations for fresh economic plans were the biggest boon to the feelings of consumers. Consumer analysis of current conditions rose 4.5% to 104.1. This may be a good sign for a holiday spending. In terms of the expectations reading, this is up 4.3% at 88.9. People have more confidence in the job market. The only negative is that inflation expectations are down 0.1% on both the one-year and five-year predictions. These come in at 2.3% and 2.5%.
Mortgage rates were up across the board again this week. No one can ever predict what the bond market is going to do on a daily basis. That said, the market’s movements since the election have only seemed to push mortgage rates in one direction: higher. If you’re looking to refinance or buy a home, it certainly wouldn’t hurt to lock your rate right now.
Thirty-year fixed-rate mortgages (FRMs) averaged 4.13% with an average 0.5 point for the week ending December 8, 2016, up from last week when they averaged 4.08%. A year ago at this time, 30-year FRMs averaged 3.95%.
Fifteen-year FRMs this week averaged 3.36% with an average 0.5 point, up from last week when they averaged 3.34%. A year ago at this time, 15-year FRMs averaged 3.19%.
Five-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.17% this week with an average 0.5 point, up from last week when they averaged 3.15%. A year ago, 5-year ARMs averaged 3.03%.
Continued optimism over upcoming changes in the economic policies with the inauguration of Donald Trump just keeps sending the stock market higher at the moment. The market closed at all-time highs last week.
The Dow Jones Industrial Average was up 3.06% on the week on the strength of a 142.04 point gain on Friday. The index closed at 19,756.85. The S&P 500 finished at 2,259.53. This is up 3.08% on the week and 13.34 points on the day. Finally, the NASDAQ was up 27.14 points to end the week at 5,444.50, up 3.59%.
The Week Ahead
Tuesday, December 13
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, December 14
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.
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.
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.
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.
Thursday, December 15
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.
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.
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.
Friday, December 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.
It’s a pretty packed calendar and we’ve got a Federal Reserve decision on short-term interest rates on top of that this week. We’ll have it all covered right here.
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