The yield on 10-year Treasury bonds rose to 2.72% in the latest week, up from 2.69%. This increase is due to strong data showing that the U.S. economy will be able to grow more than previously expected this year and next. The average rate of inflation over the last 12 months was 1.6%, down from 1.7% in February; meanwhile, earnings for S&P 500 companies are expected to show 6% growth this year, higher than 5% forecasted earlier in 2016 . The Fed should raise rates by 25 basis points in June, with two more 25bp increases possible later this year.
Four of the eleven Federal Reserve Districts reported stronger than expected growth in March: Boston, New York, Richmond and Dallas. Three Fed Districts reported moderate economic expansion: Philadelphia, Kansas City and Minneapolis; while Atlanta and St. Louis noted slightly weaker growth .
Among the five components of this index, stock prices and consumer expectations posted strong increases; while initial jobless claims, money supply and building permits fell in March .
The Institute for Supply Management’s Manufacturing PMI is at 53.9 in April , down from 54.2 in March . This reading is consistent with 5.0% growth in factory sector output in April, unchanged from March.
Manufacturing production for the U.S. increased by 0.1% in March , up from a 0.4% decline earlier this year . Factory output is expected to rise by 3.9% over the next twelve months .
U.S. car and truck sales are estimated to have reached 17 million in March , down from 17.4 million a year earlier . This is the fourth consecutive month of reduced consumer demand for motor vehicles, although these numbers are still well above the 10-year average of 15.5 million .
Existing home sales in the U.S. have dropped 1.3% in March , after a 0.6% increase the previous month . This is the smallest decline since last November, and existing home sales are still expected to reach 5 million units this year , higher than 4.7 million forecasted previously .
New home construction increased by 10.5% in March , after a 14.9% decline in February . This is the largest jump since July of 2014, and new home sales are expected to reach 635,000 units this year , higher than 600,000 forecasted previously .
The S&P Corelogic Case-Shiller U.S. National Home Price Index increased by 5.6% in February , up from a 5.4% increase in January . The index is expected to rise by at least 4% this year, which would be the 14th consecutive annual increase and would mark the longest such growth streak since June of 1987 .
Builder confidence in the market for single-family homes increased two points to 68 in April , the highest level since September of 2005 . Expectations for sales in the next six months improved, as did expectations for buyer traffic and current sales conditions. In addition, builders are more optimistic about future sales conditions, with a reading of 60 expected by October .