WEEKLY MARKET, Nov 5th, 2023
I wish you an excellent November filled with moments of love, laughter, and reflection. May your hearts be filled with gratitude and your days be blessed with joy.
While recent updates on the housing market haven't been the cheeriest, there are some positive developments to be grateful for this Thanksgiving month. Mortgage rates have significantly dropped, benefitting buyers, and home prices continue to climb for sellers.
The Case-Shiller Index has recorded its seventh consecutive increase, with a 0.9% rise in the national home price index for August 2023. Year-to-date, prices have surged by 4%, standing 1.5% higher than the previous peak in mid-2022. Meanwhile, the FHFA Index has extended its upward trend for the twelfth time, although at a slightly slower pace, with a 0.6% increase in August. Year-to-date, prices have grown by 6%, surpassing their mid-2022 peak by 4.7%.
The difference between these indices lies in the FHFA index's focus on conforming mortgage-financed transactions, excluding all cash and jumbo loan transactions.
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In Europe, there's a concern as Eurozone GDP contracted by 0.1% in the third quarter, with Germany, Ireland, and Austria experiencing economic setbacks and France's growth remaining marginal. Inflation rates also dropped more than expected, with "headline" Eurozone inflation at +2.9% YoY and "core" inflation decreasing from 4.5% to 4.2% YoY.
The job market continues to add positions, though slower, as ADP's monthly employment report reveals 113,000 jobs in September, down from the 3-month average of over 200,000 earlier in 2023. Wage growth has also slowed but remains elevated at +5.7% YoY for job stayers and 8.4% for job leavers, compared to figures of +7.7% and +15.4% a year ago.
The Federal Reserve opted to maintain its policy rate at 5.25–5.50%, which is seen as a 'dovish' move, despite Chairman Powell's usual stance. Bond prices rallied, resulting in lower yields, and 30-year mortgage rates fell to 7.51%. The precise influence of economic data versus Powell's statements on this shift remains uncertain.