Capital Markets Update

By Louis S. Barnes                                   Friday, August 29, 2014

Mortgage interest rates improved slightly this past week despite economic data that was mostly stronger than expected. Economic data stronger than expected included July Durable Goods Orders, the June FHFA Home Price Index, August Consumer Confidence, weekly jobless claims, the second look at Q2 GDP, July Pending Home Sales, the August Chicago Purchasing Managers Index, and the University of Michigan Consumer Sentiment Index. Durable Goods Orders increased by the most on record, driven mainly by aircraft orders. Consumer Confidence reached its highest level since October of 2007. Economic data weaker than expected included July New Home Sales, the June Case Shiller 20 City Home Price Index, and July Personal Spending. Increasing geopolitical tensions in Ukraine and the Middle East along with the increased likelihood of stimulus from the European Central Bank have supported Treasury and Mortgage prices. The Treasury auctioned $93 billion of 2 Year Notes, 5 Year Notes, and 7 Year Notes which were met with reasonably strong demand. Corporate profits during the second quarter were the strongest in four years.

The Dow Jones Industrial Average is currently at 17,095, up almost 100 points on the week. The crude oil spot price is currently $95.10 per barrel, up almost $2 per barrel on the week. The Dollar strengthened versus the Euro and Yen on the week.

Next week look toward Tuesday’s ISM Manufacturing Index, Thursday’s International Trade and Jobless Claims, and Friday’s employment report for August as potential market moving events. All markets are closed on Monday for Labor Day.