Straight Stats
Mortgage interest rates were mostly flat on the week despite generally weaker than expected economic data. Of note, July Existing Home Sales fell 27.2% to its lowest level since June of 1995 on expectations that sales would fall by 13.0%. Year over year, sales were down 25.5% and there is now a 12.5 month supply of existing homes. July New Home Sales were expected to increase by 3.0%. Instead, sales fell by 12.4%. There is now a 9.1 month supply of new homes. July Durable Goods Orders increased by only 0.3% on expectations that orders would increase by 3.0%. Excluding transportation orders, durable goods orders fell by 3.8% on expectations that they would increase by 0.5%. The University of Michigan Consumer Sentiment Index was slightly weaker than expected, reported at 68.9 on expectations of 70.0. On a positive note, weekly jobless claims fell by 31k on expectations that they would only fall by 15k.
Commentary
Markets waited all week for Perfesser Bernanke’s keynote speech today at the central bankers’ conference in Jackson Hole. Fishin’ up there is good, and would have been a better use of time. Rates are now rising sharply from their lows after the Perfesser’s murky address accurately reflected a divided and uncertain Fed, in a reactive state several miles from anticipation and pre-emption. There will be no new QE (quantitative easing, the Fed’s direct injection of invented cash) or any other substantive action until the economy declares itself, double-dip or modest recovery. The job market will be definitive, but this Fed will need to see two or more months of dipping data before moving. Tuesday’s Wall Street Journal contained the most extraordinary official leak in decades, a revelation of the economic and policy opinion of each Governor and regional-Fed president at the Fed’s meeting two weeks ago. Seven of 17 are dug in: we’ve done too much, or the economy is okay, or there is nothing for us to do, anyway.
Gale Boonstra, CPA, MBA, is a Senior Mortgage Consultant at Premier Lending Group in Boulder. Feel free to contact her at 303.302.3932 or gboonstra@pmglending.com
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