Weekly Economic Summary - March 12, 2010

Weekly Economic Summary - March 12, 2010
provided by Darren Tucker, Bank of America



OVERVIEW ~ The pendulum swung again, and the markets moved from pessimistic back to optimistic over the week of Monday, March 1st, through Friday, March 5th. One of the main reasons for the improved confidence among investors was an increasingly strong belief that Greece would weather its economic crisis. For one thing, the country unveiled an austerity plan designed to save the equivalent of $6.5 billion. For another, Greece successfully sold $6.85 billion in 10-year notes on Thursday (March 4) to an abundance of global bidders.

The Dow Jones Industrial Average (DJIA) started the week at 10325.26 and worked its way up gradually to a Thursday close of 10444.14. On Friday, though, the better-than-expected U.S. employment report for February surprised the markets and inspired a 1.2% rise for the DJIA, which closed at 10566.20. The U.S. 10-year Treasury note, whose interest rate yield rises when good news predominates in the economy, rose from 3.595% Monday morning (March 1) to 3.682% at the close on Friday (March 5). The Freddie Mac average rate for its 30-year mortgage loan, though, declined from 5.05% Thursday (Feb 25) to 4.97% Thursday (March 4) in the face of reduced demand for loans.

FOCUS ~ The biggest story of the week, though, was the February employment report. It is important to note that there had been a broad agreement among analysts that the number of lost jobs would reach 75,000 after January’s dip to a revised 26,000. Further, the widely-held expectation was that the unemployment rate would rise to 9.8%.

However, the number of lost payrolls amounted to 36,000, and the unemployment rate didn’t budge. Why is this important? Because nothing moves the markets like surprise. Stock market indices rose, as did interest rates.

But something even more important may be happening here. Analysts report that corporations have produced a rebound in profits by increasing demand on top of steep cost-cutting. This could lead to a higher rate of employment, as could a 15% surge in the hiring of temporary workers since October. In fact, a recent survey by Towers Watson, a human resources consultancy, found that 92% of American companies plan to hire in 2010. Improvements in the jobs sector could very possibly strengthen the economic recovery significantly. And this would include real estate sales because potential homebuyers’ confidence levels rise as jobs become more available and secure.




ECONOMIC INDICATORS

(As of 4:30 p.m. eastern, 3/8/10)

10-year Treasury note…3.71%
30-Year Fixed-Rate Mortgage
(avg)…5.31%
Spread between 10-yr note and 30-year
FRM…1.60%

Brent Crude Oil Future…80.35
Gold 100 oz Future…1122.20
Copper…341.40
Dow Jones Industrial Average
…10552.52
S&P 500…1138.50
FTSE 100…5606.72
NIKKEI…10585.92

Mortgage Bankers Association Mortgage Applications Index ~ Week ending 2/26/2010
Overall
629.9 (up 14.6%; down 8.5%
the week prior)
Purchase Money Loans
214.5 (up 9%; down 7.3%
the week prior)
Refinancing Loans
3054.3 (up 17.2%; down 8.9% the week prior)



About Darren
Darren Tucker
Mortgage Loan Officer
Direct line:
(317) 698-7411
http://www.darrentucker.com/