| Stock markets closed the week off record highs, and interest rates dropped – Stock markets closed at record highs on Thursday but dropped on Friday after a disappointing jobs report showing that hiring has stalled over the past three months. Bond yields and mortgage rates fell after the jobs report was released. Experts pretty much unanimously agree that the Fed has no choice but to drop its key interest rates at their September meeting. Their mandate is to control inflation and to promote maximum employment. Since their last meeting, we have seen two dismal jobs reports and downward revisions to June’s hiring figures. Many economists believe that the Fed has waited too long and that a larger drop than 1/4% at its September 16 to September meeting could occur. Others feel that the Fed won’t do that as it will be an admission that they missed the signs of the job market turning and will likely do a 1/4% drop followed by another 1/4% at the October meeting. The August CPI and PPI reports will be released next week. The inflation rates will be something else the Fed looks at in determining interest rate decisions.
U.S. job growth stalled in July – The Bureau of Labor Statistics reported that 22,000 new jobs were added in August. That was far below the 75,000 new jobs that economists had forecasted. The unemployment rate increased to 4.3%, its highest level since 2021, up from 4.2% in July and 4.1% in June. Stock Markets – The Dow Jones Industrial Average closed the week at 45,400.86, down 0.3% from 45,544.88 last week. Year-to-date, it is up 1.9% from 44,544.66 on December 31, 2024. The S&P 500 closed the week at 6,481.50, up 0.3% from 6,460.26 last week. Year-to-date, the S&P is up 7.3% from 6,040.53 on December 31, 2024. The Nasdaq closed the week at 21,700.39, up 1.2% from 21,453.26 last week. Year-to-date, it is up 10.6% from 19,627.44 on December 31, 2024. U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 4.10%, down from 4.23% last week. The 30-year treasury bond yield ended the week at 4.78%, down from 4.92% 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 4, 2025, were as follows: The 30-year fixed mortgage rate was 6.5%, down from 6.56% last week. The 15-year fixed was 5.6%, down from 5.69% last week. Rates ended the week almost 1/4% lower after the disappointing jobs report on Friday. 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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