| The government shutdown started on Wednesday after Congress could not reach a deal to fund the government – Why did stock markets rise to end the week at record high levels, and bond yields and mortgage rates drop? Nobody knows for sure. What we do know is that investors did not panic. Perhaps they feel that it won’t last long or that it will not impact corporate earnings. Some hope that spending may decrease. They are also expecting another rate drop at the October 28-29 Fed meeting.
September jobs report delayed – Investors and the Federal Reserve were waiting for the September jobs report to gauge the status of the job market. It was scheduled to be released on Friday. Recent data showed that hiring had slowed dramatically, and the unemployment rate has been rising. The Federal Reserve has a dual mandate. It is to control inflation and to maximize employment. Inflation has been rising, but hiring has stalled, and unemployment is rising. Fears of a deteriorating jobs market caused the Fed to make its first interest rate cut this year in September. With the Department of Labor and Statistics on shutdown, there was no official jobs report released. ADP, the world’s largest employer and payroll service, estimated that private payrolls shrank by 31,000 jobs in September, but they often are not in line with the government report. Stock Markets – The Dow Jones Industrial Average closed the week at 46,758.28, up 1.1% from 46,247.29 last week. Year-to-date, it is up 5% from 44,544.66 on December 31, 2024. The S&P 500 closed the week at 6,715.79, up 1.1% from 6,643.70 last week. Year-to-date, the S&P is up 11.2% from 6,040.53 on December 31, 2024. The Nasdaq closed the week at 22,780.51, up 1.3% from 22,484.07 last week. Year-to-date, it is up 16.1% from 19,627.44 on December 31, 2024. U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.13%, down from 4.20% last week. The 30-year treasury bond yield ended the week at 4.71% down from 4.77% 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 October 2, 2025, were as follows: The 30-year fixed mortgage rate was 6.34%, up from 6.3% last week. The 15-year fixed was 5.55%, up from 5.49% last week. The graph below shows the trajectory of mortgage rates over the past year.
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