Capital Markets Update

By Louis S. Barnes                                   Friday, August 22, 2014

Mortgage interest rates increased slightly this past week as economic data was mostly stronger than expected. Economic data stronger than expected included the August NAHB Housing Market Index, July Housing Starts, July Building Permits, weekly jobless claims, July Existing Home Sales, the August Philadelphia Fed Business Index, and July Leading Economic Indicators. Housing Starts were the strongest in eight months, Building Permits were the best since last November, and the Philadelphia Fed Business Index reached its best level since March of 2011. Year over year, though, Existing Home Sales are down 4.3%. Inflation data was reasonably tame with July CPI up 2.0% year over year. Excluding the food and energy components, July core CPI was up 1.9% year over year. In Europe, manufacturing and services sector activity slowed in August. In China, the preliminary purchasing manager’s index was weaker than expected. Geopolitical tensions eased slightly which lessens the support for the relative safety of U.S. Treasuries. Fed Chair Yellen indicated today that labor resources remain significantly underutilized.

The Dow Jones Industrial Average is currently at 17,016, up about 350 points on the week. The crude oil spot price is currently $93.22 per barrel, down almost $4 per barrel on the week. The Dollar strengthened versus the Euro and Yen on the week.

Next week look toward Monday’s New Home Sales, Tuesday’s Durable Goods Orders and Consumer Confidence Index, Thursday’s second look at Q2 GDP, Jobless Claims, and Pending Home Sales Index, and Friday’s Personal Income and Outlays as potential market moving events.