Weekly Economic Update | Week Ending September 16, 2023

Stock markets were roughly unchanged this week – Investors weighed another week of data that showed renewed strength in the economy. Key data included: The Consumer Price Index (CPI) increased by 3.7% in August from one year ago. That’s up from a 3.2% year-over-year increase in July and a 3% increase in June, marking a second consecutive monthly increase after dropping every month from July 2022 to June 2023. Oil prices hit their highest point since last November. Retail sales were also better than expected, up 2.5% from last August. Retail sales were up 2.2% in June and July from a year earlier. The economy is just not cooling the way the Fed expected when they began their tightening measures over a year ago. Investors, who felt that the Fed was done or nearly done raising rates, now feel that there will be at least one more increase in the coming months. They also feel that rates will remain high for longer than previously expected. Bond yields and mortgage rates are now at their highest levels in 20 years. Experts expect mortgage rates to drop significantly once we see some signs of slowing in the economy. The Dow Jones Industrial Average closed the week at 34,618.24, up 0.1% from 34,576.59 last week. It is up 4.3% year-to-date. The S&P 500 closed the week at 4,450.32, down 0.2%from 4,457.59 last week. It is up 15.9% year-to-date. The Nasdaq closed the week at 13,704.34, down 0.4% from 13,761.53 last week. It is up 30.9% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.33% up from 4.26% last week. The 30-year treasury bond yield ended the week at 4.42%, up from 4.33% last week. We watch bond yields because mortgage rates follow bond yields.

Mortgage ratesThe Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of September 14, 2023, were as follows: The 30-year fixed mortgage rate was 7.18%, up slightly from 7.12% last week. The 15-year fixed was 6.51%, almost unchanged from 6.52% last week.

Home sales data from the California Association of Realtors and the National Association of Realtors will be released next week.

Have a great weekend!