“You cannot control the behavior of others, but you can always choose how you respond to it.”—Roy T. Bennett, American self-help author
NATIONAL MARKET UPDATE
Despite low inventories, Existing Home Sales grew 0.8% in October, following September's gain, which was the largest in a year. Sales are still down 5.8% from a year ago, underlining the lack of supply, as demand remains high.
New Home Sales also rose in October. But before we get too excited, the 0.4% gain was due to a downward revision to September's number. But an upward trend is apparent, as the pace of sales is 9.1% above the June 2021 bottom.
The good news is, there's a recent rise in the inventory of completed homes after nearly a year of declines.Plus, for existing homes, price gains have decelerated significantly, up a yearly 13.1%, down from 23.6% in May.
REVIEW OF LAST WEEK
BLACK FRIDAY DEALS... Quality stocks were going for bargain prices on Friday as the Dow booked its worst day in a year on news of a new omicron variant of the coronavirus. Investors feared new lockdowns would weaken global growth.
Growth is weak enough in the U.S. Last week, Q3 GDP had the economy growing at a 2.1% annual rate, a substantial slowdown from the 6.5% growth the first six months, when government checks stimulated demand.
PCE inflation, the Fed's favorite measure, was up 5.0% annually, but weekly jobless claims fell to their lowest level since 1969, and businesses are investing. Durable goods orders, excluding transportation, are up eight months in a row.
The week ended with the Dow down 2.0%, to 34,899; the S&P 500 down 2.2%, to 4,595; and the Nasdaq down 3.5%, to 15,492.
Overall bond prices ended the week flat, the UMBS 3.0% off .22, to $103.73. The national average 30-year fixed mortgage rate stayed unchanged in Freddie Mac's Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW… Freddie Mac's Chief Economist notes, "mortgage rate volatility has been low. For most of 2021, mortgage rates have stayed within half a percentage point, which is a smaller range than in past years."
THIS WEEK'S FORECAST
PENDING HOME SALES, CONSTRUCTION SPENDING, MANUFACTURING, SERVICES, JOBS ALL UP... The Pending Home Sales index of signed contracts on existing homes should turn positive in October. Construction Spending is forecast up overall, but we'll watch the residential number. The ISM Manufacturing and Non-Manufacturing indexes are expected to show both sectors in expansion territory. Analysts predict new Nonfarm Payrolls will remain around the 500,000 level for November.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months. For most Fed watchers, a rate hike remains out of the picture the entire first half of next year. After that, there's growing sentiment for a rate gain to tame inflation. Note: In the lower chart a 20.7% probability of change is a 79.3% certainty the rate will stay the same.
AFTER FOMC MEETING ON:
Probability of change from current policy:
AFTER FOMC MEETING ON:
BUSINESS TIP OF THE WEEK
Thank this year's top clients and referral partners. A great way to do this is to record a selfie video for each of them and text it. Tell them how grateful you are for the business they brought your way and the impact it's had on your life and work.
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