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Events
This Week:
GDP
Lower
Durable
Orders Rose
Home
Sales Fell
Manufacturing
Mixed
Events
Next Week:
Mon
8/30
Income
Tues
8/31
Chicago PMI
FOMC Minutes
Wed
9/1
ISM Manuf.
Thur
9/2
Pending Sales
Fri
9/3
Employment
ISM Services
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Weak
Data Supports Lower Rates
Generally
weaker than expected economic data again pushed mortgage rates to new lows
this week. In a highly anticipated speech Friday morning, Fed Chief
Bernanke confirmed that economic growth has fallen below the expected
levels in recent months. He also suggested that the Fed is unlikely to take
further stimulus action unless the economy deteriorates significantly. The
current Fed outlook is for below average economic growth with low
inflation, which is a favorable environment for low mortgage rates.
The
impact of the homebuyer tax credit was seen in the weak housing market data
released this week. July Existing Home Sales dropped 27% from June to an
annual rate of 3.83 million units, the lowest level since May 1995. July
New Home Sales showed a decline of 12% from June to the lowest level ever
recorded. These figures sound terrible, but they really just demonstrate
the effect of the homebuyer tax credit on the timing of purchases. The
National Association of Realtors (NAR) still expects total existing home
sales this year to be roughly the same level as last year.
Since
the financial crisis, the Federal Housing Association (FHA) has grown rapidly
and is now backing nearly half of all new home-purchase loans. To boost
reserves and reduce risk to taxpayers, the FHA will raise the annual fee it
charges to new borrowers. In particular, for case numbers ordered October 4
or later, it will raise annual insurance premiums (MIP) to 0.85% or 0.90%,
based on LTV, up from 0.55%.
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Also Notable:
- The four-week average of Jobless Claims rose to
the highest level since November 2009
- Fed officials were particularly divided over the
decision to buy Treasuries at the last meeting
- The Fed's Bullard suggested that a double-dip
recession is "not very likely at this point"
- Credit card debt dropped 4% during the second
quarter to the lowest level since 2002
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Average
30 yr fixed rate:
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Last
week:
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-0.02%
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This
week:
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-0.03%
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Stocks
(weekly):
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Dow:
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10,100
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-100
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NASDAQ:
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2,140
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-10
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Week
Ahead
The
biggest economic event next week will be the important Employment report on
Friday. As usual, this data on the number of jobs, the Unemployment Rate,
and wage inflation will be the most highly anticipated economic data of the
month. Early estimates are for a decrease of about 120K jobs in August.
Before the employment data, Personal Income will be released on Monday. The
Chicago PMI will be released on Tuesday, along with the minutes from the
August 10 Fed meeting. ISM Manufacturing will come out on Wednesday.
Pending Home Sales, a leading indicator for the housing market, is
scheduled for Thursday. ISM Services, Productivity, Construction Spending,
Consumer Confidence and Factory Orders will round out the busy schedule.
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