Archive for the 'Market Trends' Category
Wholesale Inventories Increase 1.1%; Sales Jump 2.9%, signaling that companies will continue to add to stockpiles to meet demand.
Import prices increased 2.2% in April, and exports increased 1.1% . Higher fuel and nonfuel prices contributed to the advances in each month. The 2.2% increase in the import-price index followed a revised 2.6 percent gain in March.
Treasury 3-Year Notes Decline Before U.S. $32 Billion Securities Auction, with prices falling for the first time in nine days before a $32 billion sale of 3yr USTs, the first of three days of note and bond sales. The Federal Reserve will buyback of U.S. debt maturing from 2015 through 2016. Demand for bonds has risen in recent says amid revived worries about Greece’s financial stability and its impact on the European policy and growth outlook
Pimco Turns More Negative on U.S. Debt. Bill Gross of PIMCO, added to bets in April on further price declines in U.S. government-related bonds.
Bernanke’s QE2 Averts Deflation, Spurs Rally, Credit. Ben S. Bernanke ’s $600 billion strike against deflation is paying off, as stock and debt markets rise, bank lending grows and economists forecast faster growth.
Mortgage rates for a 30 year fixed-rate in April have risen by more than .5% from November 2010 according to Freddie Mac’s Primary Mortgage Market Survey results released May 5. The national average was 4.71% in May up from 4.24% in November 2010 (In 2009 the national average was 5.04% and 6.03% in 2008).
This upward trend is due in part to a variety of positive economic data and geo-political factors that reverberate throughout the financial world. Even news of stability in the face of significant international economic and political crisis has been received by Wall Street as a positive sign that we are slowly trending toward an economic recovery.
As the stock market becomes more attractive for investors, the bond market must compete by lowering prices which increase yield percentages for Treasury bonds which is what mortgage rates are based on. As yields increase, rates follow.
How significant a recovery including increased hiring trends is still anyone’s guess but one factor is certain; interest rates are the most significant component which affects what you pay for your home. The higher your rate, the more you pay. And as the economy grows in strength, rates will go up.
In fact, the National Average for a 30 year fixed-rate over the last 40 years was 9.04% (as reported by Freddie Mac) which offers some perspective as to how low rates currently are.
Even with talk of a double dip in property values, rising rates can translate to significantly higher costs for you whether you purchase or refinance a property.
As an example, our loan officers at Samuel Scott Financial Group explain to their clients that if they were purchasing a home today for $600,000 with a loan amount of $480,000 at 4.71% and compare that to a 5% decline in property values ($570,000) with a loan amount of $456,000 with the National 40 year average at 9.04%, over a 10 year period you will have paid over $110,000 more for your home. And that is factoring the $30,000 less for a 5% decline in property values. If you hold the property and loan until loan maturity (30 years) the difference is over $390,000!
There are few times during certain economic cycles when the financial stars align to create the optimal time to purchase a home. Now is the time. With a combination of low rates, increased inventories (meaning more to choose from), low prices, and negotiating leverage, this equates to a most advantageous Buyer’s Market.
When to take advantage of this unique opportunity can not be assessed by anyone’s Crystal Ball but it doesn’t take a financial wizard to know that timing is everything and the window of opportunity is now.
Zillow: First Quarter Home Value Declines Match Worst of Housing Recession; Bottom Unlikely to Appear Before 2012. Home values fell 3% in the 1Q2011and 1.1% in March from the previous month, pushed down by an abundance of foreclosed homes on the market,
U.S. Treasury Notes Trade Near Year’s High After Greece’s Debt Rating Cut. Treasury 10-year notes yields traded at almost the lowest this year after Standard & Poor’s lowered Greece’s long-term sovereign debt rating, fueling demand for the safety of U.S. government securities. Some investors think the end of the Fed’s bond-buying program in less than two months will actually be a boon to Treasurys, and they see the drop in commodity and stock prices last week as further proof. Over the past four weeks, the yield on the 10-year Treasury note has fallen from 3.58% to 3.16%, its lowest level since December.
Trichet Says Global Central Bankers United in Inflation Fight. European Central Bank President Jean- Claude Trichet said the world’s central bankers are united in fighting inflation fueled by surging commodity prices and fast- growing emerging economies
Irish to Avoid ‘Doomsday,’ Central Bank Chief Says as Rescheduling Raised, as a government minister and prominent professor suggested the nation should reschedule debts from its as much as 85 billion-euro ($121 billion) bailout.
Jobless Claims jumped by 43,000 to 474,000 in the week ended April 30, the most since August and much higher than the expected forecast of 19k to 410,000. A spring break holiday in New York, a new emergency benefits program in Oregon and auto shutdowns caused by the disaster in Japan were the main reasons for the surge, a Labor Department spokesman said as the data was released to the press. Continuing claims rose by 74,000 in the week ended April 23 to 3.73 million.
Nonfarm business productivity rose at a 1.6% annual rate in 1Q2011, after a 2.9% increase in 4Q2010, originally reported 2.6% rise. Unit Labor Costs climbed 1% rate after dropping 1% the prior quarter.
Treasuries Advance on Outlook for Slower Economic Growth, Less Inflation. The 30yr bond price advanced for a sixth day, and pushed the yield to 4.30% the lowest level since December 8th. The yield on the 10-year note fell three basis points, or 0.03 percentage point, to 3.19%. Focus will be directed at tomorrows Non Farm Payroll report, with the consensus estimate of an increase of 185,000 workers to payrolls in April, and an unemployment rate at 8.8%.
Crude Oil Futures Decline a Fourth Day on Signs of Slower Economic Growth. Oil fell a fourth day, the longest losing streak in eight weeks, Crude oil for June delivery lost as much as $3.55 to $105.69 a barrel after U.S. jobless claims rose, bolstering concern that economic growth and fuel demand will decline in the world’s biggest crude-consuming country.
Fed Presidents Signal Employment Growth Too Slow to Remove Record Stimulus . Two Federal Reserve regional bank presidents indicated that the central bank won’t remove record stimulus soon, saying the Fed is missing its goal for full employment and inflation isn’t a long-term risk.
MBA Mortgage Applications Survey: The Market Composite Index increased 5.3%, Refinance Index increased 2.7% and the Purchase Index increased 10.0%. “Purchase application volume jumped last week largely due to another sharp increase in applications for government loans. Borrowers were likely motivated to apply for loans before the scheduled increase in FHA insurance premiums,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Refinance activity increased somewhat, as rates dropped to their lowest level in a month towards the end of the week.” The refinance share decreased to 58.5% and the ARM share increased to 6.5%. The average 30-year rate decreased to 4.83% and the average 15-year rate decreased to 4.07%.
U.S. Existing Home Sales Rise, Fail to Recover Ground Lost: Sales of previously owned U.S. homes rose more than expected in March. The National Association of Realtors said sales rose 3.7 percent month over month to an annual rate of 5.10 million units after an upwardly revised 4.92 million unit pace in February. Although this still does not cover the amount lost from last month. The median price declined from a year earlier, and 40 percent of the sales were distressed properties.
Treasuries Decline as Stocks Rally Globally, Traders Add to Inflation Bets: Higher stock markets restrained demand for securities and expectations on inflation draws near the highest levels since 2008. The two-year yield is up from the lowest level since March 24 and ten-year yields have moved up almost a quarter percentage point from last month. Ten-year yields increased three basis points to 3.39 percent at 10:38 a.m. in London, according to Bloomberg Bond Trader prices. The 3.625 percent note due in February 2021 declined 8/32, or $2.50 per $1,000 face amount, to 101 29/32.