For the week of February 27, 2016 – Vol. 15, Issue 8

>> Market Update 

QUOTATION OF THE WEEK... "Good seasons start with good beginnings." --Sparky Anderson, Major League Baseball player, coach and manager

INFO THAT HITS US WHERE WE LIVE ... The housing marke certainly got off to a good start this year. Existing Home Sales shot up 3.3% in January to a 5.69 million unit annual rate--their fastest sales pace since 2007. The National Association of Realtors cheif economist commented: "Market challenges remain, but the housing market is off to a prosperous start." Indeed, these sales are up a healthy 3.8% over last year. The challenges alluded to include low inventories, which have now fallen 20 months in a row, and a median price up 7.1% from a year ago, thanks to the growing demand. But this should bring more on-the-fence sellers into the market to boost supply.

Let's also note that mortgage rates are still extremely low by historical standards, incomes are growing and the homeownership rate will move higher, as it continues to be key to the American dream.

BUSINESS TIP OF THE WEEK... At the end of each day, write down your top three business priorities for tomorrow. When you go to work in the morning, tackle the most important one first.

>> Review of Last Week

COULD THIS BE A TREND?... The week featured some better than expected economic data, plus a bit of a recovery in oil prices, whose decline haing in up 5.8% for the year.

The week's good economic data featured a sharp rebound in Durable Goods Orders, up 4.9% in January following their drop in December. Initial Unemploy
 preferred inflation measure, this is getting close to the 2% target they want to see before the next rate hike.

The week ended with the Dow UP 1.5%, to 16640; the S&P 500 UP 1.6%, to 1948; and the Nasdaq UP 1.9%, to 4590.

Friday's positive economic news hurt bond prices, as investor money left the safety play to get in on the action in equities.
The 30YR FNMA 4.0% bond we watch finished the week down just .03, at $104.92.
After barely moving the week before, n
ational average 30-year fixed mortgage rates remained essentially flat, rising just .01% (1 basis point) in Freddie Mac's Primary Mortgage Market Survey for the week ending February 23. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... Last year's 1.17 million housing starts was the highest level of home building since 2007.

>> This Week’s Forecast

PENDING HOME SALES, CONSUMER SPENDING, INFLATION, MANUFACTURING ALL UP... ThIs week should give us another snapshot of our painfully slow economic recoverye predicted up a bit once again, foretelling more existing hoying at 4.9%.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Feb 27 – Mar 3

 Date Time (ET) Release For Consensus Prior Impact
M
Feb 27
08:30 Durable Goods Orders
Jan %
-0.4% Moderate
M
Feb 27
10:00 Pending Home Sales Jan 0.%
1.6% Moderate
Tu
Feb 28
08:30 GDP - 2nd Estimate
Q4 %
1.9% Moderate
Tu
Feb 28
09:45 Chicago PMI Feb 0 50.3 HIGH
Tu
Feb 28
10:00 Consumer Confidence Feb 0 111.8 Moderate
W
Mar 1
08:30 Personal Income Jan % 0.3% Moderate
W
Mar 1
08:30 Personal Spending Jan % 0.5% HIGH
W
Mar 1
08:30 Core PCE Prices Jan % 0.1% HIGH
W
Mar 1
10:00 ISM Index Feb 0 56.0 HIGH
W
Mar 1
10:30 Crude Inventories 2/25 NA +0.6M Moderate
W
Mar 1
14:00 Fed's Beige Book Mar NA NA Moderate
Th
Mar 2
08:30 Initial Unemployment Claims 2/25 K 244K Moderate
Th
Mar 2
08:30 Continuing Unemployment Claims 2/18 NA 2.060M Moderate
F
Mar 3
10:00 ISM Services Feb 0
56.5 Moderate
                                                                                                          

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months... A slight majority of Fed watchers now think we'll get the next rate hike in May, but the central bank will keep rates at that level in June. Note: In the lower chart, a 22% probability of change is a 78% certainty the rate will stay the same.

Current Fed Funds Rate: 0.5%-0.75%

After FOMC meeting on: Consensus
Mar 15 0.5%-0.75%
May 3 0.75%-1.0%
Jun 14 0.75%-1.0% 

Probability of change from current policy:

After FOMC meeting on: Consensus
Mar 15       22%
May 3       52%
Jun 14       68%