Economic update for the week ending October 2 2021


Stock markets dropped this week – Talks of a government shutdown, which were averted, and political uncertainty over the fate of the bipartisan infrastructure bill and a massive potential reconciliation bill dominated the news this week. Stock market indexes suffered their largest monthly losses in September since March of 2020. September is often a rocky month for stocks. We will see what October brings. Third quarter corporate profits will be released in the coming weeks, and it is expected that the fate of the infrastructure bill and the reconciliation “Build Better” bill should be sorted out one way or the other. Both of those bills contain massive spending which will stimulate the economy but would also add to inflationary pressures, and expand the debt. The reconciliation bill also raises taxes for corporations, investors, and families making over $400,000 a year. The Dow Jones Industrial Average closed the week at 34,326.46, down 1.4% from 34,798.00 last week. It is up 12.2% year-to-date. The S&P 500 closed the week at 4,357.04, down 2.2% from 4,455.48 last week. It is up 16.1% year-to-date. The NASDAQ closed the week at 14,566.70, down 3.2% from 15,047.70 last week. It is up 13.2% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.48% up slightly from 1.47% last week. The 30-year treasury bond yield ended the week at 2.04%, up, from 1.99% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The September 30, 2021, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 3.01% up from 2.88% last week. The 15-year fixed was 2.28% up from 2.15% last week. The 5-year ARM was 2.48% up from 2.43% last week.

The September Jobs report will be released next Friday and included in next week’s update.