Economic update for the week ending October 13, 2018

Stocks have largest weekly loss since March – Stock markets ended higher on Friday after six straight losing sessions to end the week with the largest weekly loss in seven months. Investors feared rising interest rates, trade war concerns with China, and rising international pressures after the International Monetary Fund reduced its growth expectations for next year. Friday, a report showed that inflation grew less than expected, which calmed investors. Next week, third quarter earnings are going to begin to be reported. Analysts expect those to be up over 20% from last year. The Dow Jones Industrial Average closed the week at 25,339.99,  down from 26,447.05 last week. It is up 2.5% year-to-date.  The S&P 500 closed the week at 2,767.13, down from 2,885.57 last week. It’s up 3.5% year-to-date. The NASDAQ closed the week at 7,496.89, down from 7,788.45 last week. It’s up 8.6% year-to-date.

Treasury Bond Yields lower this week –  Bond yields dropped this week after reaching multi-year highs last week. The 10-year Treasury bond closed the week yielding 3.15%, down from 3.23% last week. The 30-year Treasury bond yield ended the week at 3.32%, down from 3.40% last week. We watch treasury bond yields because mortgage rates follow bond yields.

Mortgage rates at highest level in 8 years  – The October 11, 2018 Freddie Mac Primary Mortgage Survey reported that the 30-year fixed mortgage rate average was 4.90%, up sharply from 4.71%  last week. The 15-year fixed was 4.29%, up from 4.15% last week. The 5-year ARM was 4.07%, up from 4.01% last week. Bond yields dropped later in the week. Next weeks mortgage rates will be slightly lower.

Inflation tame in September – The consumer price index (CPI) rose just 0.1% for the month in September, and 2.3% from one year ago. That was below expectations of 0.2%, and 2.4%.

Have a great weekend!