Being Thankful: The Weekly Market Update

Giving Thanks and More

Giving Thanks and More

Thanksgiving arrives this week. Every year, this is the day we reserve for giving thanks. Certainly, in our country we have much to be thankful for. We are one of the richest countries of the world when you measure by per-capita income, and perhaps the richest when you measure per-capita income against the size of our population. But it is not all about riches. It is also about our freedom and democracy. Yes, the recent political campaign turned a lot of people off, but how many would opt for the alternative of not having the right to vote?

On the other hand, it is easy to look at the aggregate numbers and forget that these averages can hide the millions who are not as fortunate residing right in our own country. And certainly, Thanksgiving is the time that our focus upon charity is also renewed. What makes our country great is not only our riches, but also that we are a leader with regard to charitable giving as well. Thus, we hope everyone will take some time to share, donate or volunteer during Thanksgiving week.

As important as Thanksgiving is, the economy marches on in the wake of the election and with an important meeting of the Federal Reserve Board’s Open Market Committee meeting coming in December. The recent spike in long-term interest rates has been concerning for many market watchers, especially since this spike is accompanied by concern that inflation will be on the rise. The question is whether this rise in rates is an overreaction to the surprise result of the election, or are their more fundamental long-term changes coming our way? This will be a topic we will analyze during the coming weeks.

The Weekly Market Update

Rates rose sharply in the past week, reflecting the sharp increase which has taken place since the election. For the week ending November 17, Freddie Mac announced that 30-year fixed rates rose to 3.94% from 3.57% the week before. The average for 15-year loans increased to 3.14%, and the average for five-year adjustables moved up to 3.07%. A year ago, 30-year fixed rates were at 3.97%, virtually the same as today's levels.

Attributed to Sean Becketti, Chief Economist, Freddie Mac -- "Last week's election fell in the middle of our survey week, making it impossible to determine how closely the rates on home loans would track the post-election sell-off in the Treasury market. This week, the verdict is in -- over the last two weeks the rate on 30-year fixed loans jumped 40 basis points to 3.94 percent, almost identical to the 39 basis point increase in the 10-year Treasury yield. If rates stick at these levels, expect a final burst of home sales and refinances as 'fence sitters' try to beat further increases, then a marked slowdown in housing activity."

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.