While the economic data released last week was somewhat mixed, the Dow rose over 500 points on improved outlook for future economic growth due to strong bank earnings reports and tame inflation data. Volatility is likely to continue as the markets try to sort our whether the economy is still failing or if the worst is behind us.
Retail Sales in June were much stronger than expected up 0.6%. Consumer Prices were up as expected primarily due to soaring gasoline prices, however, CPI is actually down 1.4% compared to one year ago, the biggest decline since 1950. The housing sector data released last week showed improvement. Housing Starts rose 3.6% in June to the highest level in seven months. Building Permits jumped 9%. The National Association of Home Builders sentiment index increased to the highest level since September 2008.
On the flip side, manfacturing data was less than amazing. Industrial Production was down 0.4% and Capacity Utilization fell to its lowest level since records began in 1967. The Fed released its minutes from the June 24th FOMC meeting, expressing reluctance to increase the MBS purchasing program and suggesting they will begin to discuss an exit strategy. The report also suggested the Unemployment Rate will exceed 10% this year and that the economy continues to be weak and vulnerable.
The economic calendar will be very light this week, although bank earnings news continues to come out. Today we have Leading Economic Indicators, Thursday we have Existing Home Sales and Jobless Claims, and Michigan’s Consumer Sentiment survey will come out on Friday. Finally, Thursday’s announcement on the size of upcoming Treasury auctions may have an impact on mortgage rates.
Currently the 30-Year Fixed sits at 4.875% (5.054% APR).
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Central Coast Lending, Inc.