Stock markets post largest monthly gains since October 2011 in February – The Dow Jones Industrial Average closed the month at18,132.70, up 5.6% from the 17,164.95 close on January 30. The S&P 500 closed the month at 2,104.50, up 5.5% from January’s close of 1,994.99. The NASDAQ closed up 7.1% for the month. It closed the month at 4,963.53, up from 4,635.24 on January 30.
Treasury Bond yields are up sharply for the month – The 10 year Treasury bond closed the month at 2.00% up sharply from 1.68% on January 30. The 30 year treasury yield was 2.50% which was also up from 2.25% on January 30. Rates dropped about 1/8% from the previous week after a downward revision in the GDP and a CPI report showing signs of deflation.
Mortgage Rates rise for the month, yet still below rates of one year ago – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.80%, up from 3.66% the last week of January. The 15 year fixed was 3.07%, also higherthan 2.98% the last week of January. The 5 year ARM was 2.99%, up from 2.86% at the end of January. The 1 year ARM was 2.44%, also higher than 2.38% at the end of January. These rates were for loans up to $417,000. Higher loan amounts, also called jumbo loans, have rates about 1/4% higher. Most of our loans in our markets are jumbo sized loans which are running just above 4% on 30 year fixed loans, and around 3.375% on 15 year loans. Rates were higher last week, so at least they ended the month trending lower.
Consumer confidence falls slightly in February from an 11 year high in January, yet still at healthy level – The Thomson Reuters/ University of Michigan Survey reported that consumer sentiment measured 95.4 which was down from 98.1 in January, yet still better than 93.6 in December. This report is an important gage because it is a way to forecast consumer spending, an important driver of the economy.
Fourth quarter GDP growth is revised downward – Fourth quarter gross domestic product, the broadest measure of goods and services produced across the U.S., was revised to a 2.2% annual rate from 2.6%.
257,000 Non-farm jobs created in January in U.S. – 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% as703,000 previously discouraged workers entered the workplace. Hourly 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. The February Jobs data will be released next Friday.
U.S. pending home sales shows that home sales rose in January – The National Association of Realtors reported that its home sales index showed a sales increase of 1.7% in January from December. The index was up 8.4% from one year ago. It should be noted that closed sales were down 0.2% in January.
California home prices up, but number of sales down – Data quick reported that the January 2015 number of homes and condominiums sold in California were down 30.6% from the number of single family homes sold (closed) in December. The median price was up 6.5% compared to last January marking the 35th consecutive month of year over year price increases. The Southern California region had the median sales price up by 7.6% year over year. Foreclosure and short sales accounted for just about 6% of sales each. Foreclosure sales reached a peak of 56.7% of sales in February 2009. Cash sales accounted for 24.5% of all sales.
The California Association of Realtors also reported that the number of sales were down 3.9% in January from December, and down 2.7% from last January. The median price was $426,790, up 3.4% from last year. The Los Angeles region January median price was $441,600, up 4.3% from one year ago, and the number of sales dropped 4.3% from last January. These figures are from sales reported to MLS systems, while DataQuick data is from recorded sales.
Inflation tame in January – The Consumer Price Index showed a decrease of 0.7% in consumer prices in January. The year over year index showed prices down 0.1% for the past 12 month period. It was the first 12 month decline in the price index since October 2009. While deflation is a major risk to the economy, the Federal Reserve stated after the report was released that since the drop represented mostly energy costs which are down sharply. Without energy price increases were still well below the 2% inflation target they stated. After this report was released interest rates dropped. They had been about 1/8% higher last week. This report and the downgrade of the GDP fourth quarter report made investors feel that rate increases were not imminent.
Have a great weekend!
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