They’ve removed the cubicle walls around my desk. It feels a little more open. You know what else is breaking through walls right now? The stock market just keeps going up.
Durable Goods Orders: New orders of durable goods were up 1.8%. They were down 0.6% on the year. When transportation orders are taken out, they’re down 0.2% for January. That said, this indicator is up 2.4% on the year. Core capital goods are down 0.4% for the month, but up 0.5% on the year. Digging deeper into the numbers, orders of both domestic and defense aircraft were up 1.8% in January. Unfilled orders are down 0.4%. This isn’t necessarily a good thing because it means people won’t be hiring to cut into the backlog. However, one good thing is upward revisions to December, including a 0.2% gain for motor vehicles.
Pending Home Sales Index: Pending home sales were down 2.8% to 106.4 in January. This means there will probably be fewer sales of existing homes reported in February and March. The big culprit for this is the West, which is down 9.8% for the month. The Midwest is also down 5.0%, but the Northeast and South both show gains.
Gross Domestic Product (GDP): GDP was up 1.9% in the fourth quarter. This is no change from the last estimates. The consensus had been for 2.1% growth. Consumer spending was up 0.5% and was at 3.0% on the quarter, and the big contributors were durable goods, which were up 11.5%. Nonresidential fixed investment was down 0.2% and residential investment was also down a bit. Inventories were up to $46.2 billion. Although this contributes positively to the GDP number, it may not be good because it means things are going unsold. Americans are also exporting more than they’re importing. This subtracted 1.7% from the overall number. Prices rose at a 2.0% rate.
International Trade in Goods: The nation’s goods gap rose $4.8 billion to $69.2 billion. The consumer goods and vehicle imports are adding to the gap. Exports were down 0.3% and imports were up 2.3%. Vehicle imports were up 4.8% and consumer goods imports were down 2.9%. On the export side, core capital goods were down 4.6%.
S&P Corelogic Case-Shiller HPI: Price growth was quite strong according to this index, up 0.9% for the month and 0.3% on a non-seasonally adjusted basis in December. Prices are up 5.6% overall on the year. Chicago had a 1.5% price gain; Cleveland and Boston were both up over 1%. Seattle is up 10.8% on the year and Portland is up 10.0% on the year.
Consumer Confidence: Consumer confidence is up 3.2 points in February to 114.8. Fewer Americans think jobs are hard to get, which has this down 0.8 points. More Americans see more jobs ahead as this metric was up to 20.4%. Fewer among us see less jobs ahead, which is down to 13.6%. People also think incomes will rise. More Americans plan to buy cars and trucks, and there’s been no change in inflation expectations at 4.9%.
MBA Mortgage Applications: Purchase applications were up 7.0% and refinance applications were up 5.0%. This lifted weekly applications 5.8%. Overall, the average mortgage rate on a 30-year fixed-rate conforming mortgage was down six basis points to 4.30%.
Personal Income and Outlays: Personal incomes were up 0.4% on the month. The wage and salary figure matched. Consumer spending was up just 0.2%, which means people are saving a bit more. The savings rate is up 0.1% to 5.5%. Turning to price data, prices are up 0.4% overall and 0.3% in core categories. Prices are up 1.9% and 1.7% on the year in those categories.
Jobless Claims: Initial claims were down 19,000 to 223,000. That’s a new low for this economic cycle. The four-week average is down 6,250 to 234,250. Continuing claims were up 3,000 to 2.066 million. The four-week moving average is unchanged at 2.072 million.
Rates were down last week. This might be the calm before the storm as the Federal Reserve is expected to make a move on interest rates, pushing them upward at the next meeting. It’s a great time to lock your rate right now.
Looking at the actual rates, 30-year fixed-rate mortgages (FRMs) averaged 4.10% with an average 0.5 point for the week ending March 2, 2017, down from last week when they averaged 4.16 %. A year ago at this time, 30-year FRMs averaged 3.64%.
On the shorter-term side, 15-year FRMs this week averaged 3.32% with an average 0.5 point, down from last week when they averaged 3.37%. A year ago at this time, 15-year FRMs averaged 2.94%.
Finally, the 5-year Treasury-indexed hybrid adjustable rate mortgages (ARMs) averaged 3.14% this week with an average 0.4 point, down from last week when they averaged 3.16%. A year ago, the 5-year ARMs averaged 2.84%.
Money just keeps pouring into the stock market right now. That’s not only because people think the economy is doing well but also because the Federal Reserve is expected to raise the short-term funds rate next week.
The Dow Jones Industrial Average broke down a barrier this week, coming in at 21,005.71 at Friday’s close. This was up 2.74 points on the day and 0.88% on the week. The S&P 500 was up 1.20 points Friday to close at 2,383.12, up 0.67% week over week. The NASDAQ was up 0.44% to close at 5,870.75, up 9.53 points.
The Week Ahead
Tuesday, March 7
International Trade (8:30 a.m. ET) – International trade is composed of merchandise (tangible goods) and services. It’s available by export, import and trade balance for six principal end-use commodity categories and for more than 100 principal Standard International Trade Classification system commodity groupings.
Wednesday, March 8
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.
Thursday, March 9
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.
Friday, March 10
Employment Situation (8:30 a.m. ET) – The employment situation report measures unemployment in the labor force as well as the sentiments of workers about the job market.
There’s a rare second Friday of the month release of the employment report. That’ll really be worth keeping an eye on as it’s the last one before the Federal Reserve makes an interest rate decision next week.
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