February 24, 2010

 

KEY INDICATORS [2/23/10 close]

Gold $1104.20/ounce [up]

Crude Oil (Brent) $77.24/brl [up]

U.S. Dollar to…

 Euro .7394 [up]

 Japanese Yen 90.03 [up]

6-mo Treasury Bill Yield 0.19%

10-yr Treasury Note Yield 3.69%

[6-mo up 2 bps, 10-yr unchgd]

11th Dist Cost of Funds 1.828%[-]

30-yr Fixed-rate Mortgage 5.42%

15-yr Fixed-rate Mortgage 4.87%

1-yr ARM 4.73%

[HSH averages rates: 30-yr

up 4 bps,15-yr up 12 bps; 1-yr ARM up 53 bps]

 

Mortgage Bankers Association Mortgage Applications Index

week ending 2/12

  Overall

  600.5 (down 2.1%; down 1.2% the week prior)

  Purchase Money Loans

    212.3 (down 4%; down 7% the week prior)

  Refinancing Loans

    2860.1 (down 1.2%; up 1.4 the week prior)

 

Jobless Claims 2/13

    473,000 – prior week 442,000 – continuing claims edged to 4.563 m

 

Housing Starts Jan Up 2.8%

 

Conference Board Leading Indicators Jan Up 0.3%

 

Consumer Confidence Index Jan Down to 46 from 56.5

 

Weekly Commentary

 

“Consumer confidence plunged by more than 10 points in February to its lowest level since April. However, the decline was typical of months where severe blizzards have hit large portions of the country. In the past, the decline was mostly reversed in the following month and was completely reversed in two months. Hence, there is no reason for alarm at the decline.” [Scott Hoyt, Moody’s Economy.com]

There is nothing like a big snowstorm to dampen the spirits of an economy, apparently, so the latest consumer confidence figures fell into a deep snowdrift. But the low level of confidence can’t be attributed solely to the weather. It’s a difficult economy out there with few reasons for cheer.

Notably, the new claims for unemployment insurance, which give us a tentative clue about the improvement, if any, in the jobs market, seem more to tease than to clarify. The markets were cheered when, after the week ending February 6, we learned that initial claims fell from 483,000 to 442,000 (recently revised from 440,000). It seemed further proof that the employment situation was improving—and consumer confidence will only improve if the employment outlook improves—but for the following week (ending February 12), the initial claims rose again to 473,000, throwing a wet blanket on our already-weak optimism.

There are several places to focus our attention in the economy just now. We can (and should) watch the unfolding debt drama in the European Union, centered currently on Greece—which will soon attempt to sell 10-year notes to pay for some of its debt. We can watch the recent signs of health in the American economy which have coaxed interest rates a bit higher, egged on perhaps by the Federal Reserve’s tentative hike to the rate charged at its discount window. We can watch the American jobs market with great care, being careful not to be swayed by the data that tell us little about the future, though much about the past. And we can watch the day-to-day movements of interest rates, particularly mortgage rates.

At present, though, all of this careful watching is only being rewarded by more questions. The answers, as the unemployment insurance claims have shown us, are tantalizingly difficult to interpret.

This is the way a slow and tentative recovery looks: like the weather, it is truly unpredictable. But this too will pass; a spring thaw is almost certainly, though nearly imperceptibly, on the way.