|Economic update for the week ending December 12, 2020|
|Stock markets closed lower this week after three weeks of gains – Stocks dropped slightly as new unemployment claims surged for a second week. This was a result of layoffs due to increased shutdowns of non-essential businesses throughout the country. Markets held up well considering the exponential spread of new COVID-19 cases, because the FDA moved toward approval of the Pfizer COVID-19 vaccine. It’s the first of several vaccines to be approved. Experts report that vaccinations will start as early as Monday. A long-awaited COVID-19 relief bill failed to materialize again this week. It was reported that a deal was going to be approved on Monday, but fell apart later in the week as the sides could not agree on key issues. An emergency stop-gap one week spending bill to fund the government averted a shutdown for a week. Hopefully a COVID-19 relief bill will be attached to a more permanent government funding bill. The Dow Jones Industrial Average closed the week at 30,046.37, down 0.6% from 30,218.26 last week. It’s up 5.4% year-to-date. The S&P 500 closed the week at 3,663.46, down 0.1% from 3,699.12 last week. It is up 14.8% year-to-date. The NASDAQ closed the week at 12,377.87, down 0.7% from 12,464.23 last week. It’s up 38.2% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 0.90%, down from 0.97% last week. The 30-year treasury bond yield ended the week at 1.63%, down from 1.73% last week. We watch bond yields because mortgage rates often follow treasury bond yields.
Mortgage rates – The December 10, 2020, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 2.71%, unchanged from 2.71% last week. The 15-year fixed was 2.26%, unchanged from 2.26% last week. The 5-year ARM was 2.79%, down from 2.86% last week.
November home sale figures will be released next week. CAR will be reporting that November home sales rose above 500,000 on an adjusted annualized rate for the first time in 11 years! It’s the highest number of sales in November ever, and will represent a year over increase of approximately 20% from the number of homes sold last November. Prices will also show an increase of nearly 20% year over year. Price increases in the last quarter added over $1 trillion in home equity. Showings last week also increased. They were 170% above the number of showings for the same period one year ago. It is surprising to see such results in the middle of a pandemic!
Have a great weekend!