Economic update January 2, 2015
Economic update January 2, 2015
Stock markets down from last week, but post 6th consecutive year of gains! Longest streak since the mid 1990's –The Dow Jones Industrial Average closed the week at 17,832.99, down from 18,053.71 last week, but up from 16441.35 on January 2, 2014! The DOW Jones Industrial Average was up 7.5% for the year in 2014! The S&P 500 closed the week at 2058.20, down from last week's close of 2088.77, but up from last January 2, 2014's close of 1831.98. The S&P 500 was up 11.4% for the year for 2014. The NASDAQ closed at 4726.81, below last week's close of 2088.77, and above last January 2, 2014's close of 4,143.07. The Nasdaq gained 13.4% in 2014!
Treasury Bond yields drop in 2014! – The 10 year Treasury bond closed the week at 2.12% down from last week's close of 2.25%. The 10 year treasury yield was 3% on January 2, 2014! The 30 year treasury yield was 2.69% down from last week's close of 2.81%. The 30 year treasury yield was 3.92% last January 2, 2014! Mortgage rates follow bond rates.
Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.87% almost unchanged from last week's 3.83%. The 30 year fixed survey average was 4.53% on January 2, 2014! This represents a drop of almost 3/4%! The 15 year fixed was 3.15%, slightly up from last week's 3.10%. It was 3.55% last January 2! That's a drop of almost 1/2%. The 5 year ARM was 3.01%, it was 3.05 last January 2. The 1 year ARM was 2.40%, and 2.56% last January 2. Rates dropped later in the week so next week's survey should show slightly lower 30 and 15 year rates.
Gas prices end year down over $1.00 per gallon. - Oil closed at $52.81per barrel on January 2 2015 down from $95.76 January 2, 2014. Many parts of the country have gas prices under $2.00 per gallon. We are about $2.60 per gallon, due mostly to higher taxes, and also more expensive cleaner burning blends.
Low inflation causes other commodities to drop - The last consumer price index reading showed inflation in check at an annual increase of 1.2%. That has caused commodities which are used as a hedge against inflation to drop. For examplegold closed Friday at $1189 an ounce down from January 2, 2014 when it was $1226, down about 4%. Silver closed Friday at $15.78 an ounce, also down sharply from $20.02 on January 2, 2014. A drop of over 20% for the year!
I will be doing a more complete year end report when final numbers are in for December. Employment reports for the U.S. will be out at the end of next week. The California jobs report will be available around the middle of the month. DataQuick will report home price and sale statistics in the second week of January, and the California Association of Realtors will release their market data the third week. Retail sales will be out in about 10 days. Inflation data will be out by the third week of January, as well consumer confidence readings. We will get a good year over year comparison when we have all the data.