Weekly Indicators: still all about interest rates, housing, and oil edition

 - by New Deal democrat

Quarterly and monthly data reported in the last week included weak, but positive GDP growth in the 2nd quarter. Real median wages were up. Employment was positive in trend, and the unemployment rate dropped slightly. The internals were poorer, with aggregate hours, average wages, and the manufacturing workweek (one of the 10 LEI's) down. Consumer confidence (another component of the LEI) was also down. Personal income was up, but less than spending, so the savings rate went down.

There is evidence that the moribund manufacturing sector is coming to life again, with a positive Chicago PMI, improved positive ISM manufacturing index (and greatly improved new orders, another component of the LEI). Factory orders were also up.

Let's start this week's look at the high frequency weekly indicators again by looking at the Oil choke collar:

Oil prices and usage

• Oil $106.94 up $2.24 w/w


• Gas $3.65 down -0.04 w/w


• Usage 4 week average YoY up +3.2%

The price of Oil was close to its 52 week high. The 4 week average for gas usage was, for the fourth week in a row after a long streak to the contrary, up YoY.

Interest rates and credit spreads

•  5.25% BAA corporate bonds down -0.04%


• 2.57% 10 year treasury bonds up +0.03%


• 2.68% credit spread between corporates and treasuries down -0.07%

Interest rates for corporate bonds had been falling since being just above 6% in January 2011, hitting a low of 4.46% in November 2012. Treasuries previously were at a 2.4% high in late 2011, falling to a low of 1.47% in July 2012, but remain back above that high, although they have backed off the recent new high. Spreads made a new 52 week low this week. Their recent high was over 3.4% in June 2011.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:

• -3% w/w purchase applications


• +5% YoY purchase applications


• -4% w/w refinance applications

Refinancing applications have decreased sharply in the last 10 weeks due to higher interest rates to a two year low. Purchase applications have also declined from their multiyear highs in April, and this week were again only slightly positive YoY.

Housing prices

• YoY this week +9.0%

Housing prices bottomed at the end of November 2011 on Housing Tracker, and averaged an increase of +2.0% to +2.5% YoY during 2012. This weeks's YoY increase made a new 7 year record.

Real estate loans, from the FRB H8 report:

• -0.5% w/w


• -0.1% YoY


• +1.9% from its bottom

Loans turned up at the end of 2011 and averaged about 1% gains YoY through most of 2012.  Over the last few months, the comparisons have completely stalled, and this week turned negative.

Money supply

M1

• +1.3% w/w


• +2.3% m/m


• +8.6% YoY Real M1

M2

• +0.2% w/w


• +1.6% m/m


• +5.1% YoY Real M2

Real M1 made a YoY high of about 20% in January 2012 and eased off thereafter. Earlier this year it increased again but has backed off its highs significantly.  Real M2 also made a YoY high of about 10.5% in January 2012.  Its subsequent low was 4.5% in August 2012. It increased slightly in the first few months of this year and has generally stabilized since, although it has declined slightly in the past few weeks.

Employment metrics

The American Staffing Association Index rose 1 to 95. It is up +2.9% YoY

Initial jobless claims

•   326,000 down -17,000


•   4 week average 341,250 down -5000

Tax Withholding

• $165.2 B for the month of July vs. $144.0 B last year, up +$21.2 B or +14.7%


• $141.2 B for the last 20 reporting days vs. $130.6 B last year, up +10.6 B or +8.1%

Daily tax withholding has improved to the middle part of its YoY range compared with its YoY average comparison in the last 7 months. Initial claims remain within their recent range of between 325,000 to 375,000, and have flattened out just as they have in the last 3 springs and summers.

Transport

Railroad transport from the AAR

• +7200 carloads up 2.5% YoY


• +6100 carloads or +3.7% ex-coal


• +6000 or +2.8% intermodal units


• +13,500 or +2.5% YoY total loads

Shipping transport

• Harpex up 3 to 401


• Baltic Dry Index down -17 to 1065

Rail transport has been both positive and negative YoY in the last several months. This week it was positive once again. The Harpex index had been improving slowly from its January 1 low of 352, but has flattened out in the last 7 weeks. The Baltic Dry Index remained close to its 52 week high. In the larger picture, both the Baltic Dry Index and the Harpex declined sharply since the onset of the recession, and have been in a range near their bottom for about 2 years, but have stopped falling.

Consumer spending

• ICSC -1.6% w/w +2.0% YoY


• Johnson Redbook +3.3% YoY


• Gallup daily consumer spending 14 day average at $91 up $14 YoY

Gallup's YoY comparison was extremely positive this week. The ICSC varied between +1.5% and +4.5% YoY in 2012, while Johnson Redbook was generally below +3%. The ICSC has recently been relatively weak, but Johnson Redbook remains close to the high end of its range.

Bank lending rates

• 0.24 TED spread down -0.01% w/w


• 0.186 LIBOR unchanged w/w

The TED spread is still near the low end of its 3 year range, although it has risen slightly in the last month.  LIBOR remained at its new 3 year low established last week.

JoC ECRI Commodity prices

• up +0.02 to 123.79 w/w


• +6.08 YoY

The recent important changes in interest rates, housing, and Oil are still the main story. Interest rates have subsided somewhat from their recent highs, and spreads made new 52 week lows. Housing prices are positive, but purchase and refinancing applications, as well as real estate loans, are negative The Oil choke collar remains engaged.

Positives include bank rates, money supply, jobless claims, and commodities. Consumer spending is still very positive as measured by Gallup and as measured by Johnson Redbook, but only weakly positive as measured by the ICSC. Temporary staffing was quite positive for the first time in many weeks. Tax withholding for the month of July turned out quite positive.

Shipping rates were the one neutral.

The big picture remains the spike in interest rates and the concomitant decline in mortgage activity, both long leading indicators, as well as the spike in prices of gas and oil. Short leading and coincident indicators remain positive.

Have a nice weekend.