Economic news this week – Interest rates fell on tame inflation data – This week several reports suggested that inflation was cooling after picking up earlier in the year. On Wednesday the May Consumer Price Index (CPI) figures were released. Consumer prices increased 3.3% year-over-year in May, down from a 3.4% year-over-year increase in April. On a month-over-month basis, consumer prices held flat for the first time since July 2022. Core CPI, which excludes food and energy, increased 3.4% year-over-year, its smallest annual increase since April 2021. On Thursday, the Producer Price Index (PPI), a gauge of prices that producers get for their goods and services in the open market, was released. It showed that wholesale prices declined 0.2% month-over-month in May, following April’s surprise 0.5% increase. Year-over-year the PPI increased 2.2%. The core PPI increased 2.3% year-over-year. Economists had expected a 2.5% increase, so this was also good news. The graph below shows the trend of the CPI rate since 2021.
Stock markets – The Dow Jones Industrial Average closed the week at 38,589.16, down 0.8% from 38,898.99 last week. It is up 2.4% year-to-date. The S&P 500 closed the week at 5,431.16, up 1.6% from 5,346.99 last week. The S&P is up 13.9% year-to-date. The Nasdaq closed the week at 17,688.88, up 3.2% from 17,133.13 last week. It is up 17.8% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.20%, down from 4.43% last week. The 30-year treasury bond yield ended the week at 4.34%, down from 4.55% last week. We watch bond yields because mortgage rates follow bond yields. The 10-year was 4.28% on Thursday and shot up to 4.43% Friday after the hot jobs report was released.
Mortgage rates – Every Thursday Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of June 13, 2024, were as follows: The 30-year fixed mortgage rate was 6.95%, down from 6.99% last week. The 15-year fixed was 6.17%, down from 6.29% last week.
The graph below shows the trajectory of mortgage rates over the past year.
Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. Their mandate is to provide liquidity, stability, and affordability to the U.S.
May home sales figures will be released next week by the California Association of Realtors and the National Association of Realtors. You can get that data now for your county, city, or zip code at RodeoRE.com.
Happy Father’s Day to all Dads!