Index futures were set to open the trading day higher, but once the opening bell rang, it’s been one wild swing after another. Such volatility is expected on days that the Federal Reserve Open Market Committee (FOMC) releases the minutes from their most recent meeting. Frankly, these drastic changes are expected given how mixed the economic releases have been in the last couple months leaving the Fed with no obvious solution to the interest-rate question. August appeared to be an anomaly of good news while September reversed trends and negated some gains. There is not enough data out for the Fed to point out a definitive improvement-trend which would cause them to raise interest rates. Ultimately, this is what we expect Janet Yellen to say this afternoon. Additional factors causing market concern is a massive typhoon approaching Japan, the German government considering a stimulus package, and word that the first Ebola patient in the US died of the illness a short while ago. As such, we don’t feel the market is drastically trading on these interesting economic releases.

Late yesterday afternoon, we received an update on the US consumer credit situation from August 2014. Revolving credit outstanding has been edging higher, in what was thought to be a good indication of consumer spending. However, the number dipped in August by $0.2 billion and ultimately ended five straight months’ worth of gains. On the other hand, non-revolving credit outstanding increased for the 36^th straight month, boosted by strong vehicle sales and the government's acquisition of student loans from private lenders; non-revolving credit increased by $13.7 billion in August. However, we do note that this gain in non-revolving credit is the smallest increase since January, and when combined with the decline in revolving credit, this made for a lower-than expected increase of $13.5 billion. Economists were looking for a total increase of $20 billion and this is also the lowest total increase since November 2013. Unfortunately, the consumer sector has not been a stand-out contributor and it needs to be since the consumer sector is the largest sector in the economy. In general, the decline in consumer spending has held back the recovery in general as consumers are less willing to use credit cards or take out loans. The chart below shows the month gains in both revolving and non-revolving credit year-to-date.

This morning, the Mortgage Bankers’ Association (MBA) provided their weekly reading on the mortgage loan indices for the week ended October 3^rd. The purchase index finally started to show some signs of life as it increased by 2.0% which is the best weekly level since July. On a year-over-year basis, the index had been trending in the low, negative double digits, is now down 8.0%. The refinancing index also increased for the week, up 5.0% after declining 0.3% in the previous week. Lower mortgage rates have also spurned an increase in activity, down 3 basis points in the week for the average 30-year mortgage ($417,000 or less) to 4.30%. We note that home sales data has been incredibly mixed and volatile as of late, so while this week’s report looks good on the surface, it’s only a small hint that the housing sector might be improving.