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Week In Review – October 4, 2019

Subject Matter Experts
Reginald J. Smith

Senior Mortgage Banker
NMLS ID 492451

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

Volume 25, Number 35
Economic Highlights for the Week Ending October 04, 2019

MONDAY, September 30th 
The CoreLogic home price index increased 3.6% year-over-year in August, matching the pace set in July. Monthly growth slipped to 0.4% from 0.5% in the previous month.
TUESDAY, October 1st 
Motor vehicle sales rose to an annualized pace of 17.2 million units in September, up from 17.0-million-unit annual pace in August. Light truck and SUV sales increased 0.6% on the month to 12.4 annualized units as car sales rebounded slightly to 4.8 million annualized units. Vehicle sales have been maintaining an annual pace above 17 million units so far this year which helps boost overall retail sales making consumer spending a strong contributor to U.S. economic growth. U.S. manufacturing activity continues to suffer under trade tensions. The ISM manufacturing index fell to 47.8 in September from 49.1 in August. The decline in the index to a level below 50 indicates contraction in manufacturing activity. Details were weak as production and employment dropped last month. New orders were little changed but also remained below 50. Manufacturing sector weakness can be weathered in the broader economy as long as the consumer holds up in the months to come.
WEDNESDAY, October 2nd 
The MBA mortgage applications index rose 8.1% for the week ending September 27 with both the purchase and refinance indexes moving higher. The refinance index jumped 14.2% on the week as the purchase index edged up 0.9%. Contract mortgage rates fell last week just enough to drop below the psychologically important 4.0% level. The 30-year fixed rate mortgage for conforming loans fell 3 bps to 3.99%.
THURSDAY, October 3rd 
Jobless claims rose 4k to 219k for the week ending September 28. The four-week moving average was unchanged at 212,500. Jobless claims are steady and low and remain consistent with strong demand for labor. Employment indicators are all pointing toward a solid monthly employment report for September, due out tomorrow. The ISM nonmanufacturing index, which tracks the service industries of the economy, fell to 52.6 in September from a level of 56.4 in August. The current level of the index still shows expansion in service sector activity last month however the pace of growth slowed. Business activity, new orders, employment and inventories all slipped last month as prices paid increased and new export orders gained. Service sector activity as well as the broader economy appear to be slowing down from stronger growth earlier this year which will likely detract from third quarter GDP.
FRIDAY, October 4th 
Monthly payroll growth missed expectations in September but still remains solid and indicative of very tight labor market conditions. Payrolls increased by 136k last month, a bit below an expected increase of 145k jobs but an upward revision to August payrolls resulted in a net 38k job gain. Manufacturing jobs were the major weak link last month, due to slowing global trade; they declined by 2k. Tight labor market conditions did not trigger wage gains last month as average hourly earnings were unchanged on a monthly basis and dropped to a 2.9% year-over-year growth rate that is the lowest since July last year. Wage pressures are not accelerating. Separately, the unemployment rate fell to a fifty-year low of 3.5% from 3.7% previously. After a bumpy week, equities advanced on Friday following the U.S. jobs report that assuaged worries about a sharp economic slowdown while leaving open prospects for another Fed rate cut possibly this month. The Dow gained 372.68 to 26573.72.

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%


Inflation reports highlight on an otherwise light economic calendar in the coming week. Subdued inflation readings should keep hopes alive for another rate cut at the end of this month, October 29-30.

UFSC Week In Review
Key Interest Rates Latest 6 Mos Ago 1 Yr Ago
Prime Rate4.755.50 5.25
Fed Discount
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