Economic update for the week ending September 14, 2019
Stock markets up for third straight week – Investors are optimistic that a trade deal with China is close. Tensions eased after China announced that it was lifting tariffs on dozens of U.S. products. The Trump Administration responded by delaying an increase in tariffs that were to begin next month. It was feared that a trade war could push the country into a recession. Those recession fears have eased over the past three weeks as both countries have eased up the rhetoric and delayed, or removed some tariffs. This has pushed stocks up and markets are now near record highs. Unfortunately, treasury bond yields which had dropped to near record lows as a result of recession fears have moved sharply higher. Higher treasury bond yields have pushed up mortgage rates sharply. The Dow Jones Industrial Average closed the week at 27,219.52, up 1.6% from 26,797.46 last week. It’s up 16.7% year to date. The S&P 500 closed the week at 3007.39, up 1% from 2,978.81 last week. It is up 20% year to date. The NASDAQ closed the week at 8,176.71, up 0.9% from 8,103.07 last week. The NASDAQ is up 23.2% year to date.
U.S. treasury bond yields much higher – The 10-year treasury bond closed the week yielding 1.90%, up from 1.55% last week. The 30-year treasury bond yield ended the week at 2.37%, up from 2.02% last week. We watch treasury bond yields because mortgage rates often follow bond yields.
Mortgage rates higher this week – The September 12, 2019 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.56% up from 3.49% last week. The 15-year fixed was 3.06%, up from 3.00% last week. The 5-year ARM was 3.36%, up from 3.30% last week. Unfortunately, rates rose sharply on Thursday and Friday after the survey. Next week’s 30-year will be almost 4%.
Housing numbers should be released next week for August home sales.