Economic update December 27, 2014 Stock markets reach record highs! DOW over 18,000! – The US stock markets closed at record highs! This was another great week of economic news. Highlighted by the best holiday sales in years, the highest consumer confidence rating in nearly 8 years, lower gas prices, an upgrade in the 3rd quarter GDP, and employment gains stocks reached record highs. The Dow Jones Industrial Average closed the week at 18,053.71up from last weeks close of 17,804.8. The S&P 500 closed Friday at 2088.77 up from last weeks close of 2,070.65. The NASDAQ closed at 4806.86 also above last weeks close of 4,765.38. 3rd Quarter GDP revised upward to a 5% increase! - The Commerce Department revised the July to September GDP figure up from 3.9% to 5%. This marked the best quarterly result since 2003. Consumer confidence highest since January 2007! - The Thomas Reuters / University of Michigan Consumer Sentiment Index was 93.6 up from 88.8 in October. It was the highest reading since January 2007. The report cited better job and wage prospects, and lower gas prices as factors for optimism. Holiday sales up sharply. Results beat expectations! - Master Card reported that holiday sales from the day after Thanksgiving to Christmas Eve were 5.5% higher than the same period last year. The National Association of Retailers project that sales for November and December will increase 4.1% from last year. Treasury Bond yields rose – The 10 year Treasury bond closed the week at 2.25% up from 2.17% last week. The 30 year treasury yield was 2.81%, also up from 2.77% last week. Its impressive that rates are holding so steady. Usually when the stock market moves up so sharply rates rise, as money is moved from bonds to stocks which drive yields up. Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.83%, about the same as last weeks 3.8%. The 15 year fixed was 3.10%. It was 3.09% last week. The 5 year ARM was 3.01%. The 1 year ARM was 2.39%. Rates rose with stocks later in the week so next weeks rates will be closer to 4% for the 30 year and 3.25% for a 15 year fixed. California Association of Realtors show prices stable but number of sales drop drastically. - The California Association of Realtors reported that the price paid for the median price home in California was $445,280 down 1.1% from Octobers $450,270. This was up 5.8% from $423,090 in November 2013. The number of homes and condos sold was down 5.3% from October and down 3.4%% from November 2013. The LA metro median price was $417,270 up 1.2% from $412,190 in October and up 5.2% from $396,790 in November 2013. The number of sales were down 21.2% from October and down 6.8% from November 2013. This is a disastrous figure and the only poor economic news reported this week. I think December and Januarys sales numbers will improve as activity has picked up in the last couple of months after dropping off sharply in August and September. These figures are for closed escrows which reflect sales made about 30 to 60 days earlier. I hope you are having a great holiday season with your family and I wish you a happy new year!
Posted on: Sat, 27 Dec 2014 23:11:23 +0000
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