| Both the CPI (Consumer Price Index) and the PPI (Producer Price Index) showed that consumer prices and wholesale prices jumped more than expected in February. It was widely thought that inflation would continue to drop in 2024, but that was not the case in February. This drove up home mortgage rates to about 7%. They were almost at 8% in October and worked their way down to 6.5% by the start of the year, but have increased on strong economic news which included a jump in hiring, strong consumer spending, corporate profits above what was estimated, and the inflation rate ticking up. For investors it is not a matter of if the Fed will drop rates below their 24-year highs, it’s a matter of when they will begin dropping rates. Unfortunately, the stronger the economy the longer the Fed will wait to begin rate reductions. It seems strange to hope for bad economic news but that’s what it will take to curb inflation which will allow the Fed to reduce rates.
Stock markets – The Dow Jones Industrial Average closed the week at 38,714.77, almost unchanged from 38,722.69 last week. It is up 3.7% year-to-date. The S&P 500 closed the week at 5,117.09, down 0.1% from 5,123.69 last week. The S&P is up 7.7% year-to-date. The Nasdaq closed the week at 15,973.17, down 0.1% from 16,085.11 last week. It is up 8.4% year-to-date. U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.31%, up from 4.09% last week. The 30-year treasury bond yield ended the week at 4.43% up from 4.26% 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 March 14, 2024, were as follows: The 30-year fixed mortgage rate was 6.74%, down from 6.88% last week. The 15-year fixed was 6.16%, down from 6.22% last week. Unfortunately, rates rose at the end of the week as higher inflation data was released. 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. Home sales data for February will be released next week by the National Association of Realtors and the California Association of Realtors. We have that data tabulated now and you can view that data for your city or zip code at RodeoRe.com. |
Have a great weekend!