The Barrage of Executive Orders
As we indicated previously, we are not about to speculate as to what might happen as a result of the policies of the new Administration. There is still a tremendous road to be laid. However, we can say that the President has moved quickly to issue a barrage of Executive Orders during his first weeks in office. Some of these are merely presages of actions to come, such as the promise to dismantle the Dodd-Frank Act, and for those we will continue to wait for the eventual results. In addition, it may take quite some time for these actions to come to fruition and even longer for the results to be realized.
However, some of these orders are implementing policies and already are affecting the markets and economy. The one that stands out as an example is the travel restrictions or ban (whichever name you prefer) applied to several countries. Certainly, the lives of many individuals are affected by this action. But so are businesses and even schools. Foreign countries provide teachers for our schools and students from these countries attend these schools. And some industries, such as the medical and tech sectors, depend upon foreign workers. The next question is–could the new policy or a similar one affect economic growth negatively?
The fate of the ban rests in the courts as we write this commentary. If it is reinstated, there could be some negative consequences in the short-run. If the restrictions are expanded or extended, these negative consequences would continue or grow. On the other hand, if the restrictions are reinstated and then are eased as our country examines the targeted countries’ vetting procedures, the effect could be minimalized. Thus, even though this was an example of an Executive Order which was implemented immediately and has caused a wide-ranging reaction from many, we still don’t know of the extent of the long-term influences it might have on our economy. Of course, if it does not overcome the court challenge, the analysis will be moot.
The Weekly Market Update
Last week, rates were slightly lower. For the week ending February 9, Freddie Mac announced that 30-year fixed rates fell to 4.17% from 4.19% the week before. The average for 15-year loans decreased two ticks to 3.39%, and the average for five-year adjustables moved down two ticks to 3.21%. A year ago, 30-year fixed rates averaged 3.65%.
"The rate on 30-year fixed loans fell two basis points to 4.17 percent this week. Rates are at about the same level at which they started the year and have stayed within a two basis point range over the past three weeks. Mixed economic releases such as Friday's jobs report and uncertainty about the Administration's fiscal policies have contributed to the holding pattern in rates."
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.