Economic update for the week ending June 24, 2016
Stocks suffer their worst day in 10 months following British vote to leave European Union - Stocks declined worldwide on Friday following results of British vote to leave the European Union. Stocks were up for the week until Friday morning. Polling suggested that the British people would vote to remain in the European Union.
Following the results, the British prime minister, David Cameron, resigned, adding further uncertainty. Nobody knows what the financial impact will be. Many felt that predictions of recession in Europe and The U.K. were overblown to scare the British people into voting to remain in the E.U. But nobody really knows for sure what the impact will be, and if other countries will follow.
The Dow Jones Industrial Average closed the week at 17,400.75, down from 17,675.16 last Friday. The S&P 500 closed the week at 2,037.41, down from 2,071.22 last week. The NASDAQ closed the week at 4,707.98, down from last week's close of 4,800.34.
Bond yields remain at 3-year low – The 10-Year U.S. Treasury bond yield closed the week at 1.52%, down from 1.62% last Friday. The 30-Year U.S. Treasury bond closed at 2.42%, down slightly from 2.44% last week. Mortgage rates follow bond rates so we watch bond rates carefully.
Mortgage rates at 3-year low still—The Freddie Mac Primary Mortgage Survey released on June 23, 2016 showed that average mortgage rates from lenders surveyed, for the most popular mortgage products, were as follows: The 30-Year Fixed rate average was 3.56%. The 15-Year Fixed average rate was 2.83%. The 5/1 ARM average rate was 2.74%. Rates dropped with stocks on Friday so rates are currently a little lower.
Pending home sales rise in California - The California Association of Realtors reported on Thursday that statewide pending existing home sales rose 3.8% in May from May 2015. This was welcomed news, as year-over-year closed home sales dropped in May. They also reported that pending home sales in Southern California rose 5.6% on a year-over-year basis compared to May 2015.
U.S existing home sales hit their highest pace in over a decade - The National Association of Realtors reported that total existing home sales, which include single family homes, condos, town-homes, and co-ops, were up 4.5% in May from May 2015. The total number of sales on a annualized adjusted rate was 5.53 million homes in May 2016.
May was the highest annual pace since February 2007 when sales hit 5.79 million.
Let's see what all the markets bring next week....