Market Snapshot | July 02, 2018 | Darel Ansley | People's Bank
July 2, 2018 | Darel Ansley
 
  Darel Ansley Darel Ansley
Senior Real Estate Loan Officer
NMLS# 500247
901 North Mission Street
Wenatchee, WA 98801Office: (509) 664-5324
Mobile: (509) 860-3301
Fax: (509) 664-5315
darel.ansley@peoplesbank-wa.com
www.peoplesbank-wa.com/darel
  Peoples Bank  
 
For the week of July 2, 2018 — Vol. 16, Issue 27

>> Market Update

QUOTATION OF THE WEEK... "Always live in the ugliest house on the street--then you don't have to look at it." --David Hockney, English artist

INFO THAT HITS US WHERE WE LIVE... It was a welcome shock to see May New Home Sales spike 6.7% in May, up 14.1% from a year ago, at a 689,000 annual rate. And with housing starts recently at a recovery high, we're now building supply.

But May  Pending Home Sales slipped a modest 0.5%.  This index of contracts signed on existing homes points to a small dip in those closings in the next month or two.
Freddie Mac's chief economist notes mortgage rates have stabilized and "the economy and housing market overall are on solid footing this summer." He added, "Home price growth...is expected to moderate."

>> Review of Last Week

TRADE BARRIER... Forget all the yak about tariffs on China. The trade barrier that seems firmly in place is the one on Wall Street holding stock prices in check, sending the three major market indexes south for the second week in a row.   Cooler heads say the impacts of a trade war--if there ever is one--are likely to be temporary. Meanwhile, Personal Income and Spending went up in May, and Q1 GDP achieved 2.0%  growth, decent for that quarter.
Plus, the Chicago PMI, at 64.1, showed Midwest manufacturing expanding, while the Michigan Consumer Sentiment index rose to 98.2. And for the first time in more than six years, Core PCE inflation hit 2.0%, another sign of a strong economy. The week ended with the Dow down 1.5%, to 24216; the S&P 500 down 1.3%, to 2718; and the Nasdaq down 2.4%, to 7510.

Bonds finished the first half of the year flat to up a bit. The 30YR FNMA 4.0% bond ended UP .19, to $101.92. Freddie   Mac's latest Primary Mortgage Market Survey saw the national  average 30-year fixed mortgage rate  retreat, down now four of the last five weeks . Remember, mortgage rates  can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?...Houzz.com reports recent home buyers are a bigger part of the renovation market, and  when a home sells, kitchens and  master bathrooms yield the highest return on investment (ROI).

>> This Week's Forecast
MANUFACTURING AND JOBS GROW, A PEEK INTO THE FED... June's ISM Index of manufacturing is forecast well above 50, indicating solid expansion. Around 200,000 new Nonfarm Payrolls a month is healthy job growth, and June's number should land in that territory. FOMC Minutes let us eavesdrop on the last Fed meet, for insight on their next move.  Tuesday July 3 the stock markets will close at 1 p.m. and the bond market sat 2 p.m. All U.S. financial markets will be closed Wednesday July 4 in observance of Independence Day.

>> The Week's Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Economic Calendar for the Week of Jul 2 - Jul 6
Date Time (ET) Release For Consensus Prior Impact
M
Jul 2
10:00
ISM Index Jun
58.5 58.7 HIGH
Th
Jul 5
08:30
Initial Unemployment Claims
06/30
225K 227K Moderate
Th
Jul 5
08:30
Continuing Unemployment Claims
06/23
NA 1.705M Moderate
Th
Jul 5
10:00
ISM Services Jun
58.3 58.6 Moderate
Th
Jul 5
11:00
Crude Inventories 06/30
NA -9.9M Moderate
Th
Jul 5
14:00
FOMC Minutes Jun
NA NA HIGH
F
Jul 6
08:30
Average Workweek Jun
34.5 34.5 HIGH
F
Jul 6
08:30
Hourly Earnings Jun 0.3% 0.3% HIGH
F
Jul 6
08:30
Nonfarm Payrolls Jun 195K 223K HIGH
F
Jul 6
08:30
Unemployment Rate Jun
3.8% 3.8% HIGH
F
Jul 6
08:30
Trade Balance May -$43.6B -$46.2B Moderate

>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... It will be a quiet summer at the Fed, followed by another small hike in the fall, which the futures market says will hold through November. Note: In the lower chart, a 4% probability of change is a 96% certainty the rate  will stay the same.
Current Fed Funds Rate: 1.75%-2.00%
After FOMC meeting on: Consensus
Aug   1
1.75%-2.00%
Sep 26
2.00%-2.25%
Nov   8 2.00%-2.25%
 
Probability of change from current policy:
After FOMC meeting on: Consensus
Aug   1
           4%
Sep 26
         75%
Nov   8
         28%
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