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Economic update for the week ending March 12, 2016

Stocks higher for the fourth straight week –

Stock markets are now only slightly down for the year. They have made up the large losses suffered in January and early February. The S&P, for example, is up 11% from its two year low on February 11. This four-week rally has been fueled by better economic data and rising oil prices. Oil prices have risen 47% from their low point just one month ago when U.S. crude oil hit a 13 year low of $26.21 a barrel. Oil prices and stocks have moved in the same direction every week. While low oil prices have hurt many parts of the global and local economy, consumers are benefiting. As gasoline prices rise at the pump it will be interesting to see what happens with retail sales which have been extremely strong, and auto sales that are at all time record highs. These two sectors of consumer spending have been bolstered by low gasoline prices which have given consumers more disposable income. The dollar which has been extremely strong has weakened a bit over the last few weeks. That’s a good sign for manufacturer’s outlook on exports, as a weaker dollar makes U.S. goods less expensive to foreign currencies. The dollar is still quite strong, but off its highs.

The Dow Jones Industrial Average closed the week at 17,213.31, up from 17,006.77 last week. The S&P 500 closed the week at 2,022.19, up from 1,999.99 last week. The NASDAQ closed Friday at 4,748.47, up from 4,717.03 last week.

Bond yields higher –

Bond yields have inched up over the last few weeks. The 10 year U.S. Treasury bond closed Friday yielding 1.98%, up from 1.88% last week. The 30 year U.S. Treasury bond closed Friday yielding 2.75%, up from 2.70% last week. Mortgage rates follow bond yields so we watch bonds carefully.

Mortgage rates up slightly for second week –

The Freddie Mac Primary Mortgage Survey showed that average rates on March 10, 2016 were as follows: The 30 year fixed average rate was 3.68%. The 15 year fixed average rate was 2.96%. The 5/1 ARM average was was 2.92%.