Economic update for the week ending September 10, 2016

Stocks sold off on Friday to end the week down sharply – U.S. stocks fell sharply as investors were unnerved by comments from Federal Reserve officials that pointed towards an interest rate hike. Positive comments about the economy from Fed Bank of Boston President, Eric Rosengren, who said,”a case could be made for the central bank to raise its key interest rate sooner rather than later,” seemed to support experts opinions that the era of historical ultra low interest rates may be ending, as the economy has made up the job and economic loss from the recession. Oil prices were down more than 2% Friday, which did not help. In corporate news, Wells Fargo must pay a $185 million penalty over illegal practices by bank employees who opened millions of unauthorized bank accounts in order to meet aggressive sales goals. 5,300 employees were fired in connection with the widespread banking scam. For stocks, Friday was the worst day since February. The Dow Jones Industrial Average fell 406 points, or 2.2% for the week. The Dow Jones Industrial Average closed the week at 18,085.46, down from 18,491.96 last Friday. The S&P 500 closed the week at 2,127.81, down from 2,179.98 last week. The NASDAQ closed the week at 5,125.91, down from last week’s close of 5,249.90.

Bond yields up on Fed rate hike speculation – The 10 year U.S. Treasury Bond yield closed the week at 1.67%, up from 1.60% last Friday. The 30-year U.S. Treasury Bond closed at 2.39%, up from 2.29% last week. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates unchanged at time of survey, but were higher Friday – The Freddie Mac Primary Mortgage Survey released on September 8, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.44%. The 15-year fixed average rate was 2.76%. The 5/1 ARM average rate was 2.81%. 

Have a great weekend!