Economic update for the week ending November 26, 2022

Stock markets finished the week higher again this week – Stock markets had another positive week as data continues to point to the inflation rate moderating. Minutes from the Fed that were released on Wednesday. The minutes signaled that the Fed would be slowing the pace of interest rate hikes. Long term treasury bond rates and mortgage rates have also dropped since the October CPI was released. It showed that year-over-year inflation rose at the slowest pace since January. Next Friday, the November job’s report will be released. It is widely thought that the brisk rate of job growth that we have seen this year will have tamed in November. The strong jobs market, rising wages due to the amount of job openings outpacing the number of workers seeking jobs, and the low unemployment rate, have been fueling consumer spending. The Fed is hoping that their dramatic rate of interest rate hikes will have increased borrowing costs to an extent that companies will have to cut the number of employees. This would lead to a higher unemployment rate, less competition for workers, a lower rate of wage growth, and workers tightening their spending. Less consumer spending would curb inflation as consumer spending accounts for about 70% of the U.S. economy. The Dow Jones Industrial Average closed the week at 34,347.03, up 1.8% from 33,745.69 last week. It is down 5.5% year-to-date. The S&P 500 closed the week at 4,026.12, up 1.3% from 3,975.34 last week. The S&P is down 15.5% year-to-date. The NASDAQ closed the week at 11,225.36, up 0.7% from 11,146.06 last week. It is down 28.2% year-to-date.

U.S. Treasury bond yields continue to drop – The 10-year treasury bond closed the week yielding 3.68%, down from 3.87% last week. The 30-year treasury bond yield ended the week at 3.74%, down from 3.92% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates lower for the second consecutive week – The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of November 24, 2022, were as follows: The 30-year fixed mortgage rate was 6.58%, down from 6.61% last week. The 30-year rate was over 7% just three weeks ago. The 15-year fixed was 5.90% down from 5.98% last week.

Have a great Weekend!