| The Fed’s preferred measure of inflation showed inflation continuing to ease – On Friday, the Commerce Department released the Personal Consumption Expenditures Price Index (PCE). Headline PCE rose 2.1% from last April. Core PCE rose 2.5% from last April. Unfortunately, The Fed and treasury bond investors are still leery that tariffs will eventually cause inflation to heat up. Both short-term and long-term interest rates are much higher than they should be with the current inflation rate.
The Dow Jones Industrial Average closed the week at 42,270.07, up 1.6% from 41,603.07 last week. It is down 5.1% from 44,544.66 on December 31, 2024. The S&P 500 closed the week at 5,911.51, up 1.8% from 5,802.82 last week. The S&P is down 2.1% from 6,040.53 on December 31, 2024. The Nasdaq closed the week at 19,113.77, up 2% from 18,737.21 last week. It is down 2.6% from 19,627.44 on December 31, 2024. U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.41%, down from 4.51% last week. The 30-year treasury bond yield ended the week at 4.92%, down from 5.04% 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 May 29, 2025, were as follows: The 30-year fixed mortgage rate was 6.89%, up from 6.86% last week. The 15-year fixed was 6.03%, slightly up from 6.01% last week. The graph below shows the trajectory of mortgage rates over the past year.
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