"I never dreamed about success, I worked for it.”—Estee Lauder, American businesswoman
NATIONAL MARKET UPDATE
Fannie Mae’s June Home Purchase Sentiment Index (HPSI ) revealed 61% of respondents think now is a good time to buy a home and 41% feel it’s a good time to sell--big rebounds from the survey’s record lows two months ago.
Also rebounding: realtor.com’s latest Housing Market Recovery Index posted the largest nationwide weekly gain since its inception, ending up just a smidge below its pre-COVID baseline.
Plus, Freddie Mac’s Chief Economist likes what he sees in the housing market across the country: “The summer is heating up as record low mortgage rates continue to spur homebuyer demand.”
REVIEW OF LAST WEEK
CERTAINTY BEATS UNCERTAINTY... Overlooking uncertainty about the path of the virus, investors kept stocks heading up, motivated by the emerging certainty the economy is solidly rebounding.
The recent string of economic surprises continues: after its biggest ever monthly gain, the ISM Non-Manufacturing Index signaled that the services sector, providing almost 80% of our jobs, is expanding again.
Deliveries are getting back to normal, and the Producer Price Index of wholesale price inflation dipped, a good sign consumer prices should hold steady. Finally, initial jobless claims have now fallen 14 weeks in a row.
The week ended with the Dow UP 1.0%, to 26,075; the S&P 500 UP 1.8%, to 3,185; and the Nasdaq UP 4.0%, to 10,617.
As equities jumped, bonds slid. The UMBS 3.0% ended down 0.39, to $105.19. In Freddie Mac's Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate set a new all-time record low. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?... The first quarter saw a record $6.5 trillion in tappable equity—the amount homeowners can borrow while maintaining 20% equity. Black Knight reports more than 75% of homeowners are viable refinance candidates who could tap into their equity and lower their interest rate.
THIS WEEK'S FORECAST
HOME BUILDING, RETAIL, CONSUMER SENTIMENT UP; JOBLESS CLAIMS, INFLATION DOWN... Forecasts call for a continued rebound in Housing Starts and Building Permits. Likewise for Retail Sales and University of Michigan Consumer Sentiment. All this is no doubt helped by low Consumer Price Index inflation and the ongoing drop in Initial Unemployment Claims.
NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months... Analysts believe the Fed will keep rates near zero until we see a lot more economic recovery. Note: In the lower chart, a 0% probability of change is a 100% certainty the rate will stay the same.
Current Fed Funds Rate: 0%-0.25%
AFTER FOMC MEETING ON:
Probability of change from current policy:
AFTER FOMC MEETING ON:
BUSINESS TIP OF THE WEEK
Stop planning and start doing. Most “planning” is just procrastinating. It’s better to take some form of action than to keep assessing a situation and planning what actions you’ll take. As that athletic brand says: Just Do It.