The service sector of the U.S. economy, which makes up a large portion of the economy, continued to strengthen in October. The ISM Service Index edged lower to 60.3, below the 21-year high of 61.6 hit in September. The report showed that every major sector of the service industry expanded in October. In addition, the service sector has grown for the 105th consecutive month. A reading above 50% indicates the non-manufacturing sector economy is generally expanding; below 50% indicates the non-manufacturing sector is generally contracting.
Freddie Mac reports that cash-out refinance loans rose in the second quarter of 2018 to the highest level since 2008. However, the dollar number is well below the frothy levels seen in the years leading up to the financial crisis. Cash extractions rose 77% in the second quarter of 2018 to a total of $15.8 billion, far below the pre-recession levels of $75 - $85 billion. “While cash-outs make up the highest share of refinances they have since 2008, this is no reason for alarm,” says the
Federal Deposit Insurance Corporation. “In an environment of home price appreciation, people commonly tap into their home equity.”
The U.S. markets will be gearing up for this week's two-day Federal Open Market Committee meeting that begins on Tuesday and ends Wednesday at 2:00 p.m. ET with the release of the monetary policy statement. There is a near-zero-percent chance of a hike to the short-term Fed Funds Rate but what the statement reveals could be key. The statement could signal the path of interest rate hikes down the road. Currently, there is a 72% probability of a hike at the December meeting.
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