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Week In Review – November 8, 2019

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Economic Development
Reginald J. Smith

Volume 25, Number 40

Economic Highlights for the Week Ending November 8, 2019

REGGIE SMITH

Senior Mortgage Banker
NMLS ID 492451

LAT BRANCH HOME LOANS
6201 College Blvd. Suite 375
Overland Park , KS 66211
Office: 913.438.8276
Cell: 816.719.6610
Fax: 913.686.9062


UFSC Week In Review

MONDAY, November 4th 

Motor vehicle sales slowed more than expected in October. decreasing to an annual rate of 16.6 million from an annual rate of 17.1 million in September. Both car and truck sales declined last month; light truck and SUV sales fell 2.1% to an annual pace of 12.2 million while car sales fell 6.5% to 4.5 million annualized units. Total vehicle sales are now down 4.3% from October 2018. The vehicle sales decline last may be the start of more slowing in the consumer sector which up until this point has been a mainstay of economic growth.  According to the Senior Loan Officer Opinion Survey, banks tightened lending standards for commercial and industrial loans. On net, survey lenders reported weaker demand for all types of C&I loans. Lenders tightened standards for commercial real estate loans, for which demand also slacked. For residential mortgages, the lending standards tightened modestly in the third quarter as demand improved. Lending practices for consumer loans were slightly stricter even as demand strengthened. Overall, the Senior Loan Officer Opinion Survey indicates a slight uptick in demand for borrowing.

 TUESDAY, November 5th 

The CoreLogic home price index increased 3.5% year over year in September, slightly below 3.6% growth in August. Monthly house price growth held steady at 0.4%.  The international trade deficit on goods and services narrowed to $52.5 billion in September as imports fell more than exports. The goods deficit narrowed by $2.7 billion to $71.7 billion while the service surplus narrowed by $120 million to $19.3 billion. The decrease in the deficit was in line with expectations and will reduce net exports drag on third quarter GDP growth upon revision.  The service sectors of the economy are doing well. The ISM non=manufacturing index increased from 52.6 in September to 54.7 in October. Business activity and employment contributed to the gain as did a jump in new orders. Prices paid by businesses for services and materials fell. The increase in the index above the neutral 50 threshold indicates that the service industries are expanding at a faster pace than in the previous month.

 WEDNESDAY, November 6th 

The MBA mortgage applications index was down 0.1% for the week ending November 1. The refinance index rose 1.8% on the week as the purchase index fell 2.5%. Contract mortgage interest rates declined last week moving below the psychologically important 4.0% level once again. The 30-year fixed rate for conforming loans was down 7 bps to 3.98%.

 THURSDAY, November 7th 

Jobless claims fell by an outsized 8k last week to a very low level of 211k. The four-week moving average ticked 250 higher to 215,250, but this is also incredibly low. Initial claims data continue to indicate strong labor conditions and a healthy labor market that continues to support this years solid growth in consumer spending. The sharp drop in mortgage rates in the first half of this year had a measurable effect on metro area home prices in the third quarter. The NAR reported that the median price for an existing single-family home increased 5.1% year over year in Q3, up from 4.4% in the previous quarter. Out of 178 metro statistical areas with data, 166 or 93% recorded rising prices year over year, up from 91% in the second quarter. Metro areas in the Midwest recorded the strongest price gains, whereas metro areas in the Northeast had the slowest price gains.  Consumer credit growth moderated in September, rising only $9.5 billion. This was below consensus estimates for a $15.1 billion gain and the smallest monthly increase since June 2018. A $10.6 billion gain in non-revolving credit balances was behind the monthly increase. Revolving balances decreased for the second month in a row falling by $1.1 billion.  Equities rose and Treasury prices dropped as risk appetite improved on hopeful US-China and US-Europe trade news. The Dow and S&P 500 closed at fresh records Thursday with the DJIA up 182.24 or 0.66% to 27,674.80, while the SPX gained 8.4 points or 0.27% to an all-time high of 3085.18. The NASDAQ Composite index gained 23.89 points or 0.28% to 8464.52, its second highest close in History. Treasury prices dropped Thursday raising corresponding yields as the benchmark 10-year note yield closed at a three-month high of 1.924%.

FRIDAY, November 8th


Stock Market Close for the Week

Index Latest A Week Ago Change
DJIA 27,681.24 27,347.36 +333.88 or +1.22%
NASDAQ 8,475.31 8,386.40 +88.91 or +1.06%

WEEK IN ADVANCE

In the holiday shortened week ahead, the retail sales report for October will show us the latest consumer spending trends while several price indexes will inform on inflation.

Key Interest Rates Latest 6 Mos Ago 1 Yr Ago
Prime Rate4.755.50 5.25
Fed Discount 2.253.002.75
Fed Funds1.572.402.20
11th District COF 1.127 0.958 1.018
10-Year Note 1.94 2.47 3.21
30-Year Treasury Bond 2.42 2.883.42
30-Yr Fixed (FHLMC) 3.69 4.104.94
15-Yr Fixed (FHLMC) 3.13 3.574.33
6-Mo Libor (FNMA) 1.91625 2.62200 2.80013

Sources: IBC’ s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco

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