Fixed Rate Mortgage Rates Hits New Low
Zillow (Z) reported on Tuesday that the rate for a 15-year fixed home loan was
2.49%, down from 2.53% last week and that 30-year fixed-rate mortgages declined
for a fifth straight week, hitting its lower rate since mid-January. The rate
for a 5-1 adjustable-rate mortgage was 2.24%, up from 2.22% last week. A 5-1 ARM
has an initial rate that applies for the first five years of the loan and then
adjusts annually. "Mortgage rates saw little movement this week and continue to
hover near historic lows," said Erin Lantz, director of Zillow Mortgage
Marketplace. "This coming week, we expect rates to remain unchanged unless
Wednesday's Federal Open Market Committee statement or Friday's unemployment
report offer unexpected news."
Apple Inc. (AAPL) launched the largest ever corporate bond deal Tuesday, for
non-financial U.S. corporate issuers, to the tune of $17 billion. Apple hired
Goldman Sachs and Deutsche Bank to handle the deal and, per regulatory filing on
Monday, announced the company will offer two floating-rate notes maturing in
2016 and 2018, as well as four fixed-rate notes maturing in 2016, 2018, 2023 and
2043. As investors shift investment strategies, the Apple bond issuance may take
a bite out of the high-grade debt market. As Apple uses its first debt offering
in more than 15 years to help finance a $100 billion return to shareholders, the
bond issue will come in six parts. The return to shareholders will be by Apple
increasing quarterly dividends and buybacks. The debt issuance is a move by
Apple to avoid repatriation of taxes on cash reserves of $144 billion largely
International Business Machines Corp. (IBM) announced on Tuesday, they
authorized a $5 billion for the company's stock repurchase plan. IBM has $11.2
billion available in stock buyback funds and have raised its quarterly dividend
payment to 95 cents a share from 85 cents, payable on June 10 to shareholders of
record as of May 10.
According to the Conference Board on Tuesday, for April, consumer confidence
index jumped to 68.1. Expectations index surged to 73.3 from 63.7 during March,
marking the highest level since November. Present situation index showed little
change, inching higher to 60.4 from 59.2. The percentage of people reporting
that jobs are hard to find right now rose sharply compared to those who said
jobs are "plentiful."
U.S. Bureau of Labor Statistics reported employment cost index on Tuesday (ECI)
for Q1 rose 0.3%. ECI measures the price of U.S. labor and, is a closely
followed gauge that reflects how much companies, governments and non-profit
institutions pay their employees in wages and benefits. Wages and salaries rose
by 0.5%, benefits rose by 0.1%
S&P/CS Home Price Indices Composite - 20 (YoY) released Tuesday for February -
an increase by a non-seasonally adjusted 0.3% and on a seasonally adjusted
basis, prices rose 1.2%. Of the 20 cities that are part of the survey, 16 cities
reported faster growth; Phoenix reported largest year-over-year price growth at
23% and New York reported lowest growth by 1.9%. The 20-city composite index
indicates that prices remain nearly 29% below the 2006 bubble peak.
The Chicago Purchasing Managers' Index (PMI) released on Tuesday showed a drop
to a three-and-a-half year low at 49.0 during April and at a reading indicating
contraction. Order backlogs were particularly weak, falling to 40.6 from 45.0.
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