US Economy and Credit Markets Ended Dec. 23, 2016

Yields fell marginally in a quiet week leading up to the Christmas Holiday. Following the latest Federal Reserve benchmark lending rate increase, US Mortgage rates have jumped to over 4% on 30-year loans which is the highest reading since April of 2014. According to the National Association of Realtors, existing home inventories have fallen to less than half of their recession highs and there are now fewer than 2,000,000 existing homes listed for sale. There is an acute shortage of affordably priced entry level homes and rates have moved sharply higher over the last two months but the 15 and 30 year interest rates are still low by historical levels. The Unites States federal fund rates have median rate estimate of 1.38% for 2017 according to the implied federal funds target rate. On Wednesday, existing home sales were shown to increase 0.7% in November and are up 15.4% versus a year ago. Thursday, the last full day of trading for the week, was a busy day of economic reports and included Real GDP growth being revised up to a 3.5% annual rate. It also recorded November new orders for durable goods declining 4.6% but coming in ahead of expectations. Personal Income numbers for November were released on Thursday as well and came in below expectations. Overall consumer inflation was recorded increasing 1.4% from a year earlier. Friday's reported November single-family home sales surprised to the high side and were up 16.5% from the prior year and there is currently only 5.1 months of supply. Major economic reports (and related consensus forecasts) for the upcoming holiday shortened week include: Wednesday: December Consumer Confidence (108.5, +1.4) Thursday: Preliminary November month over month Wholesale Inventories (.1%, +.5%) and prior week Initial Jobless Claims; Friday: December Chicago Purchasing Manager (56.5, -1.1).
Posted on Tuesday, December 27, 2016 @ 8:26 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.