Stocks up as corporate tax cut becomes official – On Friday President Trump signed a tax reform bill. Key to that bill was a reduction in the corporate income tax rate which lowers rates corporations pay from 35% to 21%. The hope is that lower corporate rates will encourage businesses to remain in the U.S. l, and perhaps it will encourage companies to return the the U.S.. Stocks have had a record year as investors have speculated that this massive corporate tax cut would happen. Now it officially has. The Dow Jones Industrial Average ended the week at 24,754.06, up from 24,651.74 last week. It’s up 25.3% year to date. The S&P 500 closed the week at 2,683.34, up from its close last week of 2,675.81. The S&P is up 19.9% year to date. The NASDAQ closed the week at 6,959.26, up from its last week’s close of 6,936.58. It is up 29.3% year to date.
Bond yields rise – The 10-year Treasury bond closed the week at 2.48%, up from 2.35% last week. The 30-year treasury yield ended the week at 2.83%, up from 2.68% last week. Home mortgage rates increased proportionally to bond rates.
Mortgage Rates rise to end the week near the highest levels of the year- The December 21, 2017 Freddie Mac Primary Mortgage Survey, which gathered information from December 13-20, reported that the 30-year fixed mortgage rate average was 3.94% unchanged from 3.93% last week. The 15-year fixed was 3.38%, unchanging from 3.36% last week. The 5-year ARM was 3.39%, unchanged from last week’s 3.36%. Unfortunately, rates rose Thursday and Friday. Rates are over 1/8% higher now than the survey rates. The 30-year fixed is now over 4%. It’s about as high as we have seen this year. Next week’s survey will reflect this.
The number of California home sales, and prices increase again in November – The California Association of Realtors reported that existing single-family home sales totaled 440,340 in November on a seasonally adjusted annualized rate. That marked an increase of 2.1% from October, yet down down 0.8% from November 2016. Year to date sales are 1.1% higher than the same period last year. The median price paid for a home in California was $546,820, in November, up 8.8% from last November. Housing inventory which had been at historically low levels dropped even further. The unsold inventory index revealed that there was just a 2.9 month supply of homes in the market in November. The number of homes for sale in November was 11.5% below last November’s number.
California’s unemployment rate drops to 40 year low in November – The Employment Development Department reported that California employer’s added 47,400 new jobs in November. The unemployment rate fell from 4.9% in October to 4.6% in November. That marked the lowest unemployment rate since the state changed the way it calculates the rate in 1976.
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