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There’s a big football game around here that’s coming up on Saturday. It’s a big rivalry and you’re either on one side or the other. We’ve got some friendly competitions going on this week.

One rivalry that hasn’t been so friendly lately is that between two of the world’s biggest economies, the U.S. and China. However, some of the news coming out of the trade talks last week would seem to indicate that the two giants are reaching something approaching a truce. It’s worth keeping a close eye on in the weeks ahead. More on that later, but first, let’s get to the headlines!

Headline News

International Trade

The U.S. trade deficit with other countries narrowed by 4.76% to settle at $52.5 billion in September. This is right where consensus estimates placed the trade balance.

On the import side, these were down 1.7% to $258.4 billion. Consumer goods imports were down by $2.5 billion, hitting cell phone imports particularly hard. Meanwhile, capital goods imports were down $1.1 billion, not a good sign for business investment here in the U.S. Finally, vehicle imports were also down $1.1 billion.

Unfortunately, the decrease in the trade deficit wasn’t due to a rise in exports. Exports fell, too. The 0.9% decrease just happened to be less than that of imports. Exports of foods, feeds and beverages were down $1.5 billion, including a $1 billion decrease in soybean exports. President Trump has made a better deal for American farmers one priority of his trade negotiation strategy. Exports of capital goods were down $800 million despite a $1.3 billion increase in exports of civilian airplanes and engines.

The closely watched trade deficit in goods with China remains at $31.6 billion. This is much higher than it was earlier in the year. Meanwhile, the goods deficits with Europe and Japan are comparably much lower at $13.7 billion and $5.1 billion, respectively. Meanwhile, the U.S. is still running a services surplus of $19.7 billion even with exports of services being down $100 million while imports were up $100 million.

Finally, there are indications that overall trade activity might be slowing. Exports are down 0.4% on the year, with imports down 0.8%. The trade spat with China doesn’t appear to be helping in this area.

MBA Mortgage Applications

Overall mortgage applications were down 0.1% on the week as purchase applications were down 3%, which was enough to drive things lower despite a 2% increase in refinance applications. Purchase applications are still up 7% on the year.

The average rate on a 30-year conventional fixed mortgage was down seven basis points to 3.98% last week.

Jobless Claims

Initial jobless claims were down 8,000 last week to come in at 211,000 overall. The 4-week moving average of initial claims was up 250 to come in at 215,250.

In terms of continuing claims, these were down 2,000 last week to come in at 1.692 million. Meanwhile, the 4-week average of continuing claims was flat at 1.687 million.

Consumer Sentiment

In preliminary ratings for November, consumer sentiment was up 0.2 points to 95.7, very much in line with the 95.9 average that’s prevailed since last year at this time.

Among the concerns of consumers are tariffs, which have a big impact on industry. Consumers are less concerned with the impeachment inquiry at this point in time. Most of the focus is on employment and the stock market, and events have been going swimmingly in these areas, which is leading to increased confidence.

In terms of inflation, this number is up 0.1% over the next 5 years at 2.4% overall. Expectations for inflation over the next year are steady at 2.5%.

Mortgage Rates

Mortgage rates fell across the board last week, according to industry data collected by conventional loan investor Freddie Mac. It’s important to note that rates have been jumping around a little bit, given ongoing headlines around things like the trade situation with the Chinese and Brexit. Nevertheless, rates are in a really good spot, and it’s not a bad idea to lock your rate if you happen to be in the market for a mortgage.

The average rate on a 30-year fixed conforming mortgage with 0.5 points paid in fees was down nine basis points to 3.69%. This has fallen from 4.94% at this time a year ago.

Meanwhile, looking at shorter terms, the average rate on a 15-year fixed mortgage with 0.4 points paid was 3.13% last week, down six basis points and falling from 4.33% last year.

Finally, the average interest rate on a 5-year treasury-indexed, hybrid adjustable rate mortgage (ARM) with 0.3 points paid fell four basis points to 3.39%. This has plunged from 4.14% at the same time a year ago.

Stock Market

The S&P 500 keeps rising to record levels. There was an uptick in the buying of stocks overall last week, as positive trade vibes led investors to take on more of a risk-on sentiment. While the U.S. and China aren’t putting a time frame on the deal, it’s being reported that the sides plan to stop enforcing existing tariffs in phases.

The Dow Jones Industrial Average finished Friday at 27,681.24, up 6.44 points on the day and 1.22% on the week. Meanwhile, the S&P 500 was up 7.9 points on the day to finish at 3,093.08. Finally, the Nasdaq was up 1.06% on the week after rising 40.8 points Friday to close at 8,475.31.

The Week Ahead

Tuesday, November 12

Quicken Loans® Home Price Perception Index (HPPI) (10:00 a.m. ET) – Quicken Loans releases data every month comparing what people think their homes are worth and the actual 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 at both the national and regional levels. 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, November 13

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.

Consumer Price Index (CPI) (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.

Thursday, November 14

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.

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.

Friday, November 15

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.

With Thanksgiving coming up, expect to see more data releases than normal crammed in over the next few weeks. We’ll have it all covered in next week’s Market Update!

If you think reading about economics, mortgage rates and the stock market is the obvious cure for chronic insomnia, there are times when you just might be right. If this isn’t your favorite reading material, we’ve got plenty more home, money and lifestyle content to share with you when you subscribe to our mailing list below. This week, I’ve got football on the brain. Here’s an article on how to budget for your tailgates.

Before I go, I would be remiss if I didn’t take a moment to thank our service members past and present for their service to our country on this Veterans Day. We’re able to have tailgates, go to concerts and do simple things like enjoy time with friends and family because you always have our backs. On behalf of Quicken Loans, thank you!

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