Economic update for the week ending February 21, 2015

Economic update for the week ending February 21, 2015

Stocks hit record highs on positive worldwide economic news - The DOW Jones Industrial Average closed at a record high, the first of the year. The S&P 500 closed at its 3rd record high for the year, and the Nasdaq closed at a 15 year high. A Greek debt deal and rising oil prices, as well as more positive news both at home and abroad led stocks to rise. The Dow Jones Industrial Average closed the week at 18,140.44, a record high, up from 18,018.35 last week and up  about 1,000 points from 17,164.95 three weeks ago.  The S&P 500 closed the week at 2,110.30 well above last week's close of 2,069.99. It was 1,994.99  three weeks ago. The Nasdaq closed at 4,955.97 also higher than 4,893.84 last Friday. The Nasdaq was 4,635.24  three weeks ago.  It's been an incredible month for stocks. 

Treasury Bond yields continue to rise – The 10 year Treasury bond closed the week at 2.13%, up from last week's close of 2.05%, and up  from 1.68% three weeks ago. The 30 year treasury yield was 2.73%, up from last week's  2.63% and up from 2.25% three weeks ago. Yields up 1/2% in 3 weeks is a significant rise. Unfortunately, as stocks rise so do interest rates. 

Mortgage Rates continue to rise, up 1/2% this month - The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate  average for the week was 3.76% up from 3.69%, last week. The 15 year fixed was 3.05%, up from 2.99% last week. The 5 year ARM was 2.97%.  The 1 year ARM was also up at 2.45%.  The survey runs about a week behind. Rates rose  as bond yields rose throughout the week.  All  rates rose  this week. Conforming rates are close to 4% for 30 year terms and 3.25% for 15 year mortgages. Next week's survey should reflect these higher rates. Jumbo size loans are about .25% higher than conforming. Rates have risen .5% this month so far!

Home prices up but number of sales down - Data quick reported that the January 2015 number of homes and condominiums  sold in California were down 30.6% from the number of single family homes sold (closed) in December. The median price was up 6.5%compared to last January marking the 35th consecutive month of year over year price increases. The Southern California region had the median sales price up by 7.6% year over year. Foreclosure and short sales accounted for just about 6% of sales each. Foreclosure sales reached a peak of 56.7% of sales in February 2009.Cash sales accounted for 24.5% of all sales. 

Normal operations set to resume at West Coast Ports - Dockworkers reached a tentative contract after a prolonged labor dispute stalled international trade at west coast seaports. Normal operations are to resume tonight, but it is unclear how long it will take to clear the backlog at the ports.The 5 year deal involves 29 ports from Seattle to San Diego. These ports cover about 1/4 of all U.S. International trade. Mostly from Asia.