Where interest rates began at the beginning of the week are certainly different than where they ended up at the end of the week.  Curious to get the scoop?  Syd Leibovitch breaks down all things affecting the financial markets to make it nice and easy on you.

Stock markets rebound to make up nearly all losses for the year after finishing down for 6 out of the last 7 weeks! – Better economic news caused a rally in stocks this week. Among the highlights were: Auto sales in January were up to the highest January level in 9 years with the best percentage increase in 7 years. This caused auto stocks to rise and increased dividends paid. January job gains were healthy. Oil prices rose which helps oil stocks. The Dow Jones Industrial Average closed the week at 17,824.29, which was up from last Friday’s close of 17,164.95.  The S&P 500 closed the week at 2,055.47, up from 1,994.99  last Friday. The NASDAQ closed at 4,744.40 also up from 4,635.24  last week.

Treasury Bond yields rose sharply – The 10 year Treasury bond closed the week at 1.95%  which was up  from 1.68% last week. The 30 year treasury yield was 2.51%  which was up from last week’s close of 2.25%. Rates were down sharply after poor economic news caused investors to flee stocks and rush to bonds for safety during January. This week’s better than expected news caused that to reverse and rates rose as bonds sold off and stocks were bought. The better than expected news also puts pressure back on the Fed to raise short term rates which have been near 0% since 2008. It was widely felt that a rise would happen soon after what was considered a strong 2014.  In January some poor earnings, lower hourly wages in December (which reversed in Friday’s January number), a lower than expected GDP number for the 4th quarter of 2014 caused rates to drop and stocks to sell off. This reversed this week as the news returned to more positive views about the economy.

Mortgage Rates begin week near historic lows yet raise sharply to end the week.– The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.59%,  down from last week’s 3.66%. The 15 year fixed was 2.92%, which was down from 2.98% last week. The 5 year ARM was 2.82% The 1 year ARM was 2.39%  Unfortunately, the survey runs about a week behind. Rates rose sharply as bond yields rose throughout the week.  All  rates rose about .25% this weekThe survey will be closer to 3.75% next week for a 30 year fixed. While still under 4% conforming and just slightly over 4% for jumbo sized 30 year mortgages rates are still great, but much higher than last week.

January auto sales surge.- As a whole U.S. auto sales were up over 14% in January. The highest January increase in 7 years, and the most January sales in 9 years. General Motors reported sales up by 18%. Ford reported sales up by 16%.  Toyota increased by 16%. All Fiat, Chrysler brands were up with Jeep leading at a 23% increase.  Honda, Nissan, Mercedes, Volkswagen, Audi and Porsche all reported their best January sales in the U.S. ever. An improving job market and lower gas prices were credited to this. All in all every auto company had sales about 2% more than was forecasted. It is believed that 200,000 more automobiles may sell in the U.S. this year than were forecasted just 2 months ago. Following  this report the Dow gained 305 points on Tuesday.

257,000 Non-farm jobs created in January – January marked the 11th straight month of job gains above 200,000. This was the longest streak since 1994.  In the past 3 months over 1 million jobs have been created, the  most in 3 months since 1997. The unemployment rate increased 1% to 5.7% as 703,000 previously discouraged workers entered the workplaceHourly wages were up 12 cents an hour which was a welcome relief after wages fell 5 cents an hour in December. Year over year hourly wages were up 2.2% which was better than inflation, but not the wage growth the Fed would like to see, or that we would see in a healthy recovery. This has been a long slow, drawn out recovery. All in all the job news was very well received. ADP the nation’s largest payroll company also issued a statement that the job growth would be around 214,000 jobs added on Wednesday which fed into the rally Wednesday and Thursday, so when the report came out Friday the market was already expecting it.

I hope you are having a great weekend!
Syd


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