| Economic news for the week – The August Personal Consumption Expenditure Index (PCE), a key gauge the Fed uses to evaluate U.S. goods and services costs, was released. It showed that the 12-month inflation rate was 2.2%, down from 2.5% in July and its lowest reading since February 2021. The Bureau of Economic Analysis released its third revision of the second quarter Gross Domestic Product (GDP), the broadest measure of the strength of the economy. It showed that the economy grew at a 3% annualized pace in the second quarter, a faster rate than Wall Street had expected. These reports were another indicator that the Fed may be correct in their expectations of a “soft landing,” where inflation comes under control and the economy remains strong. We are seeing investors feeling optimistic as well. They pushed stock markets higher again this week. Stock markets have closed higher in six of the last seven weeks. All indexes hit record highs this week with the Dow closing the week at an all-time high and the Nasdaq and S&P 500 closing just off their highs set earlier in the week. It appears that investors are very optimistic about the prospects of lower interest rates and the strength of the economy.
Stock markets – The Dow Jones Industrial Average closed the week at 42,313.00, up 0.6% from 42,063.36 last week. It is up 12.3% year-to-date. The S&P 500 closed the week at 5,738.18, up 0.6% from 5,702.55 last week. The S&P is up 20.3% year-to-date. The Nasdaq closed the week at 18,119.59, up 1% from 17,948.32 last week. It is up 20.7% year-to-date. U.S. Treasury bond yields are slightly up this week – The 10-year treasury bond closed the week yielding 3.75%, up slightly from 3.73% last week. The 30-year treasury bond yield ended the week at 4.10%, up slightly from 4.07% 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 September 26, 2024, were as follows: The 30-year fixed mortgage rate was 6.08%, almost unchanged from 6.09% last week. The 15-year fixed was 5.16%, almost unchanged from 5.15% 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! |
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