Capital Markets Update

By Louis S. Barnes                                    Friday, February 27, 2015

Mortgage interest rates improved this past week as economic data was mixed. Economic data stronger than expected included the December Case Shiller 20 City Home Price Index, January New Home Sales, January Core CPI, January Durable Goods Orders, the December FHFA Home Price Index, the second look at Q4 GDP, and the University of Michigan Consumer Sentiment Index. Q4 GDP growth was revised down to 2.2% but higher than the 2.1% expected. Economic data weaker than expected included January Existing Home Sales, the February Consumer Confidence Index, weekly jobless claims, January CPI, January Durable Goods Orders excluding transportation orders, the February Chicago Purchasing Managers Index, and January Pending Home Sales. Also of note, the Treasury auctioned $90 billion of 2 Year Notes, 5 Year Notes, and 7 Year Notes, which were met with somewhat soft demand. Fed Chair Yellen testified before the Senate and House and indicated that the Fed would be patient with any rate increase. The Fed would like to be confident that the economic recovery will continue and that inflation will increase over time.

The Dow Jones Industrial Average is currently at 18,189, up slightly on the week. The crude oil spot price is currently at $48.95 per barrel, down over $1 per barrel on the week. The Dollar strengthened versus the Yen and Euro on the week.

Next week look toward Monday’s Personal Income and Outlays and ISM Manufacturing Index, Thursday’s Jobless Claims, and Friday’s February employment report and International Trade report as potential market moving events.