Inflation ticked up in October – The Consumer Price Index (CPI) showed that consumer process increased 2.6% year-over-year in October, up from a 2.4% year-over-year increase in September. Core CPI, which excludes food and energy prices, increased 3.3% year-over-year, unchanged from its September annual increase. The Producer Price Index (PPI) also increased in October. It measures wholesale prices which increased 2.4% year-over-year in October, its highest level in 4 months, and up from a 1.9% year-over-year increase in September. The Core PPI level came in at a 3.5% year-over-year increase in October, up from a 3.3% increase in September. These increases were in line with analysts’ expectations as increased retail sales, consumer confidence, and other data pointed to the economy picking up. They forecasted inflation heating up a bit. In fact, Fed Chairman Powell spoke on Thursday. He also spoke about the signs of strength in the economy. While he said that the Fed still intends to continue moving down to more neutral rates, he stated “the economy is not sending any signals that we need to be in a hurry to lower rates.” We have seen long-term bond yields and mortgage rates increase sharply since the first Fed rate drop in September due to signs that the economy appears to be picking up steam.
The chart below shows the CPI rate since 2021. Even though it moved up last month, it’s still much lower than it has been over the past two years.
Stock markets – The Dow Jones Industrial Average closed the week at 43,444.99, down 1.2% from 43,988.89 last week. It is up 15.3% year-to-date. The S&P 500 closed the week at 5,870.62, down 2.1% from 5,995.54 last week. The S&P is up 23.1% year-to-date. The Nasdaq closed the week at 18,680.12, down 3.2% from 19,289.78 last week. It is up 24.4% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.43%, up from 4.30% last week. The 30-year treasury bond yield ended the week at 4.60%, up from 4.47% last week. We watch bond yields because mortgage rates follow bond yields.
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 November 14th, 2024, were as follows: The 30-year fixed mortgage rate was 6.78%, down from 6.79% last week. The 15-year fixed was 5.99%, down from 6.00% 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.
Have a great weekend!