| Economic news – This week the September Consumer Price Index (CPI) and the Producer Price Index (PPI) were released. The CPI, one of the broadest measures of inflation showed that consumer prices increased 2.4% from one year ago, down from a 2.5% annual increase in August. The 2.4% increase in September marked the smallest annual increase in inflation since February 2021. The PPI, a measure of wholesale prices, showed prices for goods and services that producers pay increased by 1.8% from last September. These reports were quite favorable to investors and stocks rallied to end the week higher. After last week’s jobs report that showed employers added 254,000 new jobs in September and that wages rose more than 4% year-over-year investors feared that inflation could reignite. More people working and higher wages lead to more consumer spending which can cause higher inflation. At least for September, inflation continued to cool. Bond yields and mortgage rates continued to increase. Investors and lenders will need to see more evidence that the jobs market is not heating back up again and that inflation is not about to pick back up before those long-term rates come back down.
The graph below shows the history of the Consumer Price Index since 2021.
Stock markets – The Dow and the S&P 500 closed the week at record highs, while the Nasdaq closed just off its record high set in July as investors reacted to positive inflation data. The Dow Jones Industrial Average closed the week at 42,863.86, up 1.2% from 42,352.75 last week. It is up 13.7% year-to-date. The S&P 500 closed the week at 5,815.03, up 1.1% from 5,751.07 last week. The S&P is up 21.9% year-to-date. The Nasdaq closed the week at 18,342.94, up 1.1% from 18,137.85 last week. It is up 22.2% year-to-date. U.S. Treasury bond yields jumped on Friday after the September jobs report was released – The 10-year treasury bond closed the week yielding 4.08%, up from 3.89% last week. The 30-year treasury bond yield ended the week at 4.39%, upfrom 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 October 10, 2024, were as follows: The 30-year fixed mortgage rate was 6.32%, up from 6.12% last week. The 15-year fixed was 5.41%, up from 5.25% 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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