Stock markets – The May CPI Index report showed that inflation increased 5% year over year. That was highest reading since 2008. Normally a high inflation report would drive interest rates up and stocks down. That did not happen. There were several reasons that investors did not pay much attention to a report that suggested inflation was surging. Among those were that the report compares prices in May of 2021 to May of 2020 when the economy was closed and we were experiencing deflation, as prices had dropped. Another issue is that there is a shortage of virtually everything. That was an unintended consequence of closing factories across the globe to prevent the spread of COVID-19. At some point production will eventually meet the demand of consumers. Obviously after months, and even a year for some closed factories, it’s going to take some time to manufacture enough products to catch up. At that time prices for those goods should moderate. The Dow Jones Industrial Average closed the week at 34,479.60, down 0.8% from 34,756.39 last week. It is up 12.7% year-to-date. The S&P 500 closed the week at 4,247.44, up 0.4% from 4,229.81 last week. It is up 13% year-to-date. The NASDAQ closed the week at 14,069.42, up 1.8% from 13,814.49 last week. It is up 9.1% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.47%, down from 1.56% last week. The 30-year treasury bond yield ended the week at 2.15%, down from 2.24% last week. We watch bond yields because mortgage rates often follow treasury bond yields.
Mortgage rates – The June 10, 2021, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 2.96%, down slightly from 2.99% last week. The 15-year fixed was 2.23%, down from 2.27% last week. The 5-year ARM was 2.55%, down from 2.64% last week.
Home sales – May home sales figures will be released next week from the California Association of Realtors. You can find May sales figures for your city or zip code at RodeoRe.com. Most areas had about a 20% increase in prices year-over-year, as well as record numbers of closed sales. New listings also out-numbered the number of closed sales which showed that both listings and sales are at near historic record numbers. The time on the market data shows they are selling quickly!
Have a great weekend!