| Economic Highlights for the Week Ending November 21, 2008 |
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| MONDAY, November 17th |  Disrupted credit flows continue to play havoc with the markets and economy. The Fed stands ready to take additional steps if necessary to relieve market strains and economic challenges. A half-point rate cut is widely expected at the next FOMC meeting, December 16, though its effectiveness is reduced by the Fed's measures to pump liquidity into the banking system. | |
| TUESDAY, November 18th | | The NAHB housing market index fell to a reading of 9 in November from a level of 14 in October. Needless to say, the single digit level of the index is an unprecedented low for homebuilder confidence. Exceptionally weak homebuilder sentiment related to due to a weak economy and tight credit suggest that housing market conditions have further to fall before reaching the nadir. |  The NAR reported that the median existing home price fell 2.5% from Q2 to Q3 in the second largest quarterly decline since the downturn started. Median prices are 8.9% below their level one year ago and off 12.9% from their 2005 peak. CA, AZ, NV and FL again were the states reporting the largest price declines. | | The producer price index fell 2.8% in October in its biggest monthly decline on record. The drop was led by a 12.8% decline in energy prices last month. Excluding food and energy prices, the core PPI was up 0.4% in October and 4.4% over the last year. Earlier price pressures, working through the pipeline, are pushing the core rate higher but they are dissipating fast which will lead to more moderate core PPI gains. | |
| WEDNESDAY, November 19th | | The consumer price index fell 1.0% in October after a flat September. The CPI is up 3.7% over the last year but down 4.4% in the last three months as a result of falling prices for energy, housing, transportation and apparel. Excluding food and energy, the core CPI declined 0.1% on the month but id up 2.2% on the year. Weakened economic conditions are exerting significant downward pressure on prices. | | The MBA mortgage applications index fell 6.2% to 398.6% for the week ending November 14. Total mortgage applications are now 41.5% below their year ago level and continue to trend lower. A 12.6% decline in purchase applications caused the overall, weekly decline. Refinance applications actually increased 2.6% on a downtick in rates last week. | | New residential construction starts fell again in October as weakened fundamentals continue to disrupt the housing market. Housing starts declined 4.5% last month to an annual rate of 791,000 units. This was the lowest level of new home construction starts since January 1991. Total housing starts have fallen 28.0% over the past year and are now 65.2% below their January 2006 peak. | |
| THURSDAY, November 20th | | Jobless claims jumped 27k to 542k for the week ending November 15. This is a new cyclical peak in unemployment claims and their highest level since July 1992. Large increases in jobless claims over the last two weeks indicate rapidly deteriorating labor market conditions with a faster pace of layoffs and extremely weak hiring. | | Mortgage rates eased further for the third consecutive week amid signs of much lower inflation and weak economic activity. 30-year fixed rate mortgages averaged 6.04% this week compared to 6.14% last week according to Freddie Mac's mortgage market survey. | |
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| Stock Market Close for the Week |
| Index | Latest | A Week Ago | Change | | DJIA | 8046.42 | 8497.31 | -450.89 or -5.30% | | NASDAQ | 1384.35 | 1516.85 | -132.50 or -8.73% |
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| WEEK IN ADVANCE |
| The holiday shortened week is packed with economic data and monthly Treasury auctions. New and existing home sales and personal income and outlays highlight. The markets will likely be more tuned into the announcement of Obama’s economic team, Monday and other financial and credit market news. |
| Key Interest Rates | Latest | 6 Mos Ago | 1 Yr Ago | | Prime Rate | 4.00 | 5.00 | 7.50 | | Fed Discount | 1.25 | 2.25 | 5.00 | | Fed Funds | 1.00 | 1.96 | 4.51 | | 11th District COF | 2.769 | 3.280 | 4.383 | | 10-Year Note | 3.20 | 3.84 | 4.04 | | 30-Year Treasury Bond | 3.69 | 4.57 | 4.46 | | 30-Yr Fixed (FHLMC) | 6.04 | 5.98 | 6.20 | | 15-Yr Fixed (FHLMC) | 5.73 | 5.55 | 5.83 | | 1-Yr Adj (FHLMC) | 5.29 | 5.24 | 5.42 | | 6-Mo Libor (FNMA) | 3.12125 | 2.96500 | 4.80625 | | Sources: IBC' s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco | |
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