Market Commentary 1/27/17

The Dow’s climb above 20,000 was all the buzz of this week. However in other news, housing and economic data were not so rosy. New home sales fell sharply in December as a result of both increased housing prices and interest rates. Also, Gross Domestic Product (GDP) growth in the final quarter of 2016 was weaker than expected. GDP grew by 1.900% in the last quarter of 2016, below the 2.2% expected and down from the 3.5% reported in the third quarter. Overall, in 2016 GDP grew by a tepid 1.9%, down from 2.6% in 2015 and it was the worst showing since 2011.

Bond yields are trading modestly lower in response to both the poor GDP and the slow economic growth.
With rates virtually unchanged this week, we continue to closely monitor the 10-year Treasury Bond, which is trading a tad under 2.500%. We remain biased toward advising clients to lock in interest rates, although we could foresee the possibility of a small drop in interest rates given the current economic and political environment.