Stock markets post their biggest weekly decline in two years! – The US stock markets posted its largest weekly loss in two years ending seven straight weeks of gains. The International Energy Committee announced that oil demand is far below what was earlier estimated leading experts to believe that while the U.S. Economy appears strong the world wide economy may be weaker that expected. China reported that factory output fell which was another sign that worldwide demand for goods were stalling. US oil companies led with the largest losses as lower prices have cut into profits. The Dow Jones Industrial Average closed the week at 17,280.83 down sharply from last week’s close of 17,958.79. The S&P500 closed Friday at 2002.33 down from 2075.37 last Friday.The Nasdaq closed at 4653.60 also down sharply from last week’s 4780.76.Oil prices – Crude oil dropped further this week following the International Energy Committee report of lower than expected worldwide demand for oil. Oil dropped below $60 per barrel for the first time since 2009. Oil prices have dropped 47% since June when the price was $107 per barrel.
Wholesale Prices drop – The Producer Price Index showed that wholesale prices dropped .2% in November. This was the second monthly decline in wholesale prices in the last 3 months. This information is gathered from The Labor Department who reported that wholesale inflation rate is up 1.4% year over year.
Treasury Bond Rates drop! – The 10 year treasury bond closed the week at 2.10% down from 2.31% last week. The 30 year treasury yield was 2.75% down from 2.97% last week. As investors pulled money from stocks, those funds were invested into bonds which drove yields down. The producer price index also showed a drop in wholesale prices. This was another reminder that inflation is tame which also pushes rates down. The treasury yield is considered a benchmark rate as mortgages rates follow treasury trends.
Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.93% up from 3.89% last week. The 15 year fixed was 3.20% up form 3.10% last week. The 5 year ARM was 2.94% and the 1 year ARM was 2.41%. These rates are the weekly average compiled and published in the middle of the week. Rates dropped with stocks dropping later in the week so next week’s numbers should be lower.
FNMA and Freddie Mac have dropped down payment requirements to 3%- They are now offering financing with loan to values as high as 97%. They have also eased up on credit scores, and reserve requirements in order to make home lending more available.
Retail Sales beat expectations- The November retail sales report showed that retail sales had increased .7% . Without falling gas prices the number would have even been much higher. The breakdown for major sectors were: Motor vehicles and parts + 1.7%. Building materials and supplies + 1.4%. Clothing and accessories + 1.2%. Electronics and appliances + .7%. Food services a d drinking establishments + .5%. Furniture and furnishings + .5%. General merchandise + .5%. Sporting goods, hobby, books, and music +.3%. Grocery stores +.3%. Gasoline stations -.8%.
Real estate sales are still holding up well. We have not seen the seasonal drop off in activity we would normally see in December. Inventory levels are down quite a bit from just 90 days ago and rates are down.
Have a great weekend!
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