Stock markets closed higher on lower inflation report – Stocks continued to rise and have made back some of their 2022 loses. Investors are optimistic about a recovery in stock prices in 2023 on expectations that inflation continues to moderate and long-term interest rates continue to drop. The December Consumer Price Index (CCPI) report, the broadest measure of inflation, was released on Thursday. The CPI rate dropped to 6.5% year-over-year, down from 7.1% in November. It peaked at 9.2% year-over-year in June and has dropped steadily for six-straight months. We are still a long way from The Fed target of 2%. Stocks rallied mortgage rates and bond yields fell on the news, which was mostly expected. The Dow Jones Industrial Average closed the week at 34,302.61, up 2% from 33,630.61 last week. It is up 3.5% year-to-date. The S&P 500 closed the week at 3,999.09, up 2.7% from 3,895.08 last week. It is up 4.2% year-to-date. The NASDAQ closed the week at 11,079.16, up 4.6% from 10,596.29 last week. It is up 5.9% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 3.49%, down from 3.55% last week. The 30-year treasury bond yield ended the week at 3.61%, down from 3.67% last week. We watch bond yields because mortgage rates follow bond yields.
Mortgage rates – The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of January 12, 2023, were as follows: The 30-year fixed mortgage rate was 6.33%, down from 6.48% last week. The 15-year fixed was 5.52%, down from 5.73% last week. The survey is done early in the week. By Friday the 30-year had dropped to about 6%.