Inflation remained cooler in May – The Consumer Price Index (CPI) inched up from an annual rate of 2.3%, its lowest reading since early 2021, to 2.4% in May. That year-over-year increase matched its lowest level this year and its lowest level in four years, with the exception of April’s reading. Core CPI, which excludes volatile costs like food and energy, was up 2.8% year-over-year, matching April’s 4-year low. Economists surveyed expected a 2.5% increase in Headline CPI and a 2.9% increase in Core CPI, so this report beat expectations. So far tariffs have not caused inflation to rise in April and May; however, economists still fear that tariffs will drive up future inflation.

The graph below shows CPI rates year over year.

Stock markets – Stock markets were up for the week on Thursday before Israel attacked Iran and Iran retaliated. Oil prices also spiked to their highest levels in 5 months. Major indexes dropped 1.1%-1.8% on Friday to finish the week lower. The Dow Jones Industrial Average dropped almost 800 points on Friday to close the week at 42,197.79, down 1.3% from 42,762.87 last week. Year-to-date, it is down 6.3% from 44,544.66 on December 31, 2024. The S&P 500 closed the week at 5,976.97, up 0.4% from 6,000.36 last week. Year-to-date the S&P is down 1.1% from 6,040.53 on December 31, 2024. The Nasdaq closed the week at 19,406.83, down 0.6% from 19,529.95 last week. Year-to-date it is down 1.1% 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 4.90%, down from 4.97% 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 June 5, 2025, were as follows: The 30-year fixed mortgage rate was 6.84%, nearly unchanged from 6.85% last week. The 15-year fixed was 5.97%, nearly unchangedfrom 5.99% last week. The graph below shows the trajectory of mortgage rates over the past year.

The graph below shows mortgage rates over the past year.

Economic Update | Week Ending June 14, 2025

Have a Great Weekend!