Economic update for the week ending November 14, 2015

Low spending and inflation data released this week cause stocks to slide - The largest last 12 month drop in producer prices since the depths of the recession, and a weak retail spending report caused investors to pull back on stock purchases ending a rally of  6 straight weeks of  gains.  Stocks also probably suffered from the largest terrorist attacking since 9-11 when a coordinated attack hit Paris yesterday. The Dow dropped 202 points yesterday following the attacks. It was down 665 points for the week.The  Dow Jones Industrial Average closed the week at 17,245.24, down from last week's close of 17,910.33.   The S&P 500 closed the week at  2,023.04, down from last Friday's close of 2,099.20.  The NASDAQ closed the week at 4,927.88, downfrom last week's close of 5,147.12.
 

Treasury bonds yields mostly unchanged from last week - Weak inflation and spending data failed to convince investors that the Federal Reserve would hold off on increasing interest rates at the December meeting.  Most investors expect that after October's strong job growth and wage growth a rate increase is expected. The 10 year Treasury bond yield closed the week at 2.28%, slightly lower than 2.34% last Friday.  The 30 year treasury bond yield closed Friday at 3.06% about the same as last week's close of 3.09%.

Mortgage rates stable after rising last week -  The 30 year fixed rates are around 4.00% for loans up to $417,000, and around 4.25% for loans over $417,000.  The 15 year fixed rate loans are about 3.375% for loans up to $417,000, higher loan amounts have rates that are around 3.5%. 5-Year ARM and 3–Year ARM rates are both around 3.125%.

Retail sales flat in October - Retail sales rose just 0.1% in October according to the Commerce Department. Experts expected a 0.3% increase. Much of the drop was due to poor auto sales which were down 0.5%. Excluding auto sales retail sales grew just 0.2%, still below the amount expected. This is a sign that consumers may be pulling back on their spending, which could affect the 4th quarter GDP figures, which experts had expected would rebound after a disappointing 3rd quarter.

Consumer confidence higher than one month ago - The University of Michigan consumer sentiment index rose from 90.0 in October to 93.1 in early November. The report showed that consumers plan to increase spending slightly compared to those surveyed last month. This report did little to ease investors concerns about slowing growth in recent months.

Producer prices continue to fall - The Labor Department reported that its producer price index fell 0.4% in in October. For the 12 months ending October the PPI fell 1.6%, the largest decline in producer prices since the depths of the recession for a 12 month period ending in 2009. The Producer Price Index is a weighted index of prices measured within the wholesale markets, manufacturing industries, and commodities markets.