HOLIDAY SALES... Stocks sold at discount prices as the major market indexes logged their worst weekly losses of the year. Traders worried over tariff "wars," a partial government shutdown, and whether the Fed would hike too fast. 

The Fed did raise rates 0.25% last week, as expected, but reduced the probable number of next year's hikes to two. They noted, "economic activity has been rising at a strong rate" with inflation "near 2 percent" (under control).

Meanwhile, the economy rocks on. Final Q3 GDP came in at a 3.4% annual rate, the second straight Q of growth above 3%. Personal income is up 4.2% yearly, spending up 4.7%, and Michigan Consumer Sentiment a solid 98.3.

The week ended with the Dow down 6.9%, to 22445; the S&P 500 down 7.1%, to 2417; and the Nasdaq down 8.4%, to 6333.

Bonds gained as stock sales prompted flight-to-safety trades all week. The 30YR FNMA 4.0% bond went UP.42, to $101.45. Following its big drop the week before, the national average 30-year fixed mortgage rate dipped a tick in Freddie Mac's Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... Freddie Mac's chief economist noted that "homebuyers are very sensitive to mortgage rate changes--and given the further drop in rates we've seen this month, we expect to see a modest rebound in home sales."

FEDERAL RESERVE WATCH

Forecasting Federal Reserve policy changes in coming months... After last week's modest rate hike, the Fed Funds Futures market expects no further increases through May. Note: In the lower chart, a 2% probability of change is a 98% probability the rate will stay the same.

Current Fed Funds Rate: 2.25%-2.50%

Probability of change from current policy: