The markets are somewhat becalmed. We had a bit more than a week of gloom among world investors and it, perhaps unsurprisingly, seems to be passing. So long as we don't run across a surprisingly negative economic indicator soon, the markets are likely to drift further, with interest rates remaining quite low.

This is generally unexciting news. It feels like the predicted "summer doldrums." More exciting, frankly, is the unbending light-at-the-end-of-the-tunnel forecast still being issued by Michael Zoller and Moody's Economy.com. This continues to be worthy of notice.  (Quote is at the bottom of this post)

So maybe it's time for a late summer vacation and an early start to personal marketing for the rising market as we move into 2011. I can live with that.

Tim Lampe, Your Realtor by Choice for 28 Years.

KEY INDICATORS [8/25/10]

 

Gold $1227.20/ounce [up]

Crude Oil (Brent) $77.37/brl [down]

U.S. Dollar to…

    Euro .7792 [up]

    Japanese Yen 85.56 [down]

6-mo Treasury Bill Yield 0.18%

10-yr Treasury Note Yield 2.65%

[6-month unchanged, 10-yr down 18 bps]

11th Dist Cost of Funds 1.797%[+]

30-yr Fixed-rate Mortgage 4.79%

15-yr Fixed-rate Mortgage 4.26%

1-yr ARM 3.80%

[HSH averages rates: 30-yr

down 8 bps;15-yr down 8 bps; 1-yr ARM down 5 bps]

 

Mortgage Bankers Association Mortgage Applications Index

week ending 8/6

  Overall

    734.3 (up 0.6%; up 1.3%

the week prior)

  Purchase Money Loans

    175.4 (up 0.3%; up 1.5%

            the week prior)

  Refinancing Loans

    3993.0 (up 0.5%; up 1.3%

the week prior)

 

Jobless Claims 8/7

    484,000 – prior week 479,000 – continuing claims at 4.452 m

 

Retail Sales July

    Up 0.4% total – excluding auto sales, up 0.2%

 

National Association of Home Builders Market Index August

    Down 7.1%

 

Housing Starts July

    Up 1.7% - SFRs down 4.2% -

Permits also down

 

Weekly Commentary

 

“By 2011, it is expected that the national economy will have reached a point of self-sustaining growth, which will foster a stronger rebound. An end to house price declines in early 2011 will eliminate the final constraint on housing demand, and existing-home sales will take off.” [Michael Zoller, Moody’s Economy.com]

 

Zoller’s (Moody’s Economy.com) forecast has not changed for several months and, indeed, it has had little reason to do so. Moody’s/Zoller predicted the current slowdown well before it arrived, cautioned against getting overly gloomy about it, and suggested the economy (and, in particular, the real estate market) would remain slow into 2011. Then, the economy becomes “self-sustaining” and “existing-home sales will take off.”

 

The summary statement is simple: Be patient. Easy for Zoller to say, perhaps, but tough to put into practice!

 

In any case, in the midst of today’s prevailing gloom, it seems a good time to look at what some of our indicators are telling us about current investor sentiment. Let’s take it from the top of the list.

 

Gold. You’ve most likely noticed that gold, over the past couple of weeks, has moved back above $1220 an ounce. This remarkably high price for a relatively small amount of metal has been achieved because gold is considered, especially by investors in very traditional markets like the Far East, the safest  and most widely accepted form in which to hold your wealth. Gold is the wealth preserver, for most investors. And when they become worried about the security of a currency—the dollar, yen or euro, for example—they tend to rush to gold, and the resulting increased demand for gold pushes up the price of the metal, which is precisely what has been happening recently.

 

It’s worth noting, too, that investors have been putting their money into Treasury securities, which are considered the safest interest-bearing investment, since they are backed by the full faith and credit of the United States Treasury. A little more worrisome has been the shifting value of the U.S. dollar, especially against the euro. If global investors lose confidence in the U.S. economic recovery while retaining confidence in the European Union’s ability to ward off debt problems, the euro’s value will rise against the dollar—even if Treasury securities remain strong–as has recently been the case.