10-Year Treasury Yield
The benchmark 10-year Treasury note yield hit a high around 4.025% earlier in the day before pulling back to just below the key 4% level. Those moves come after central bank officials in Europe talked down rate cut expectations. The 10-year yield was last up around 5 basis points at 3.999%.
Empire State Manufacturing Index
The New York Fed's Empire State survey on Tuesday showed factory activity in the region slumping further into recession in January, with measures of new orders, employment and hours worked all plummeting.
MBA Purchase Applications
U.S. mortgage demand jumps 10% as rates fall across the board. The 30-year mortgage rate fell to the lowest level in three weeks The market index rose 10.4% to 210.5 for the week ending January 12 from a week ago. A year ago, the index stood at 239.2. Key details: The purchase index - which measures mortgage applications for the purchase of a home - rose 9.2% from a week ago. The refinance index increased by 10.8%, led by those refinancing conventional mortgages. The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 6.75% for the week ending January 12. That's down from 6.81% from the week before. Although purchase activity is lagging year-ago levels, refinance applications have improved from their recent low point and have been showing year-over-year gains, albeit at low levels,
Retail Sales Retail sales increased 0.6% in December, buoyed by a pickup in clothing and accessory stores as well as online nonstore businesses. Economists expected a rise of 0.4%. Sales ex-autos climbed 0.4%, better than the 0.2% estimate, and the “control group” increased 0.8%. On a year-over-year basis, retail sales ended 2023 up 5.6%. The numbers are not adjusted for inflation, so sales show that consumers are more than keeping up with inflation. Wall Street's main indexes dropped on Wednesday, as rising Treasury yields pressured megacaps after upbeat December retail sales data, tempering hopes of the Federal Reserve kicking off its rate-cut campaign as early as March.
Import and Export Prices
In other economic news Wednesday, import prices were unchanged in December, despite the Wall Street estimate for a 0.5% decline and following a 0.5% drop the previous month. Export prices, however, slid 0.9%, the same as in November.
Business Inventories
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Industrial Productio
Production at U.S. factories barely rose in December as increases in motor vehicle output were partially blunted by declines in machinery as well as electrical equipment, appliances and components. Manufacturing output edged up 0.1% last month, the Federal Reserve said on Wednesday. Data for November was revised lower to show production at factories rising 0.2% instead of 0.3% as previously reported. Economists polled by Reuters had forecast factory output would be unchanged. Manufacturing, which accounts for 10.3% of the economy, continues to be hobbled by 525 basis points worth of interest rate hikes from the U.S. central bank since March 2022. Overall industrial production gained 0.1% in December after being unchanged in November. Industrial production decreased at a 3.1% rate in the fourth quarter after increasing at a 1.8% pace in the July-September quarter. Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 78.6% in December. The operating rate for the manufacturing sector was also unchanged at 77.1%.
HMI Index
The big picture: The housing market is warming up as rates fall. Lower rates will not only bring buyers back to the table, they'll also make it attract homeowners with low interest rates who otherwise would be unwilling to sell.
Beige Book
U.S. economic activity saw little or no change from December through early January, while firms reported pricing pressures were mixed and nearly all cited signs of a cooling labor market, underscoring the tightrope the Federal Reserve continues to walk as it tries to reduce inflation while keeping growth and employment humming along. Almost as good as it gets wth economic growth gradually slowing, the unemployment rate remaining low, and key gauges of inflation hitting the Fed's 2% target rate for the past six months. majority of the 12 Federal Reserve Districts reported little or no change in economic activity," the Fed said in its survey released on Wednesday, known as the "Beige Book.
Jobless Claims
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Housing Starts
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Housing Permits
There were 1.0 million previously owned homes on the market in December, up 4.2% from a year ago, but still below the nearly 2 million units before the COVID-19 pandemic. At December's sales pace, it would take 3.2 months to exhaust the current inventory of existing homes, up from 2.9 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand. With supply still tight, the median existing home price increased 4.4% from a year earlier to $382,600 in December. All four regions recorded price gains. The median home price on an annual basis hit a record high of $389,800 in 2023.
Philadelphia Fed Mfg index
The Philadelphia Federal Reserve in the US announced Thursday its manufacturing index has continued to contract in January 2024. The index for current general activity increased 2.2 points but remained at -10.6, recording its 18th negative reading in the past 20 months. A level above zero indicates improving conditions, while anything below that shows worsening conditions. The market expectation for the index to come in at -7.0. More than 26% of the firms reported decreases in current activity, according to Philadelphia Fed.
Oil - Commodity
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Mortgage Rates
The 30-year fixed-rate mortgage rate averaged 6.60% this week, an eight-month low, compared to 6.66% in the prior week, according to data from mortgage finance agency Freddie Mac. That could boost home resales in the months ahead, with supply steadily rising.
Exisiting Home Sales
US existing home sales fall in December, supply shows signs of improvement. U.S. existing home sales fell in December to the lowest level in nearly 13-1/2 years, but a recovery could be in the cards this year as mortgage rates decline and housing inventory shows signs of improving. Existing home sales slipped 1.0% last month to a seasonally adjusted annual rate of 3.78 million units, the lowest level since August 2010, the National Association of Realtors said on Friday. Economists polled by Reuters had forecast home sales would be unchanged. Home resales are counted at the closing of a contract. The sales in December likely reflected contracts signed in the prior two months, when the average rate on the popular 30-year fixed-rate mortgage was stuck above 7.0%.
Consumer Sentiment UM
The latest University of Michigan consumer sentiment survey released Friday revealed a 13% jump in overall sentiment during the month of January. The index reading for the month came in at 78.8, its highest mark since July 2021, and well above economist expectations for a reading of 70.1.. Consumers have grown more confident about the direction of the economy and inflation at onset of 2024, despite persistent worries about a looming slowdown, a survey released Friday showed. The University of Michigan’s Consumer Survey of Consumers showed a reading of 78.8 for January, its highest level since July 2021 and up 21.4% from a year ago. That followed a big jump in December and comes despite public opinion surveys showing concern about the nation’s direction. On a two-month basis, sentiment showed its largest increase since 1991, said Joanne Hsu, the survey’s director.
TIC Rates
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