Straight Stats
Mortgage interest rates improved slightly on the week despite limited new economic data. Economic data of note included the August ISM Services Sector Index, which was slightly better than expected but indicated limited growth. Weekly jobless claims increased by 2k on expectations that they would fall by 9k. The July US Trade Balance showed a smaller deficit than expected and July Consumer Credit increased more than expected. European markets have been weak on renewed concerns that Greece will be unable to meet the conditions for more bailout funds to avoid default. Also, European Central Bank head Jean-Claude Trichet said that the economic outlook in Europe is not improving. President Obama proposed $450 billion in payroll tax cuts in a speech last evening to help stimulate our economy.
Commentary
The good news: US data are not double-dipping. The fresh, August survey of purchasing managers by the ISM found the service sector improved to 53.3 from 52.7 in July, a reading corresponding to GDP growth in the 2% range. This modest good news does not explain the stock market again in freefall today, nor the 10-year T-note thumping down to 1.90%. To explain the newest swan dive, look to Europe, and a tale of two speeches. Default by Greece is imminent. Again. Maybe this weekend. Maybe Europe will buy more time, maybe default will be an anticlimax, but markets today anticipate chaos. Then, the two speeches. Perfesser Bernanke spoke at midday Thursday. The whole speech was devoted to housing wreckage as the force intercepting recovery. No proposals for what we might do, of course, as that action is the province of the Administration and Congress. Three-and-a-half hours later Mr. Obama rose to deliver an energetic, tub-thumping speech. Content? Direct from the Boneless Chicken Ranch. The finished product: $447 billion of “job-creating” spending at the intellectual level of 1964. Old-fashioned, warmed-over pork.
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.
FOLLOW US