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Economic update for the week ending May 12, 2023

Stock markets closed the week with mixed results – This week we saw some positive news on inflation. The April Consumer Price Index (CPI) reported that consumer prices were 4.9% higher than one year ago, its lowest year-over-year increase in one year. That’s a long way off the Fed’s 2% target, yet way down from its peak of 9.2% last June. Produce Prices were also lower. Weekly jobless claims were up for the first time in over a year and consumer sentiment dropped to a six-month low. Corporate Q1 profits have been strong. 78% of companies reported earnings that beat expectations. For the most part all sectors were pretty stable this week with the exception of the regional banks. Those stocks had another tough week. So far we have not seen all this talk about the U.S. debt ceiling and a potential default effect stock prices. The Dow Jones Industrial Average closed the week at 33,300.62, down 1.1% from 33,674.38 last week. It is down 0.1% year-to-date. The S&P 500 closed the week at 4,124.08, down 0.3% from 4,136.25 last week. It is up 7.4% year-to-date. The NASDAQ closed the week at 12,284.74, up 0.4% from 12,235.44 last week. It is up 17.4% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 3.46%, almost unchanged from 3.44% last week. The 30-year treasury bond yield ended the week at 3.78%, almost unchanged from 3.76% 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 May 11, 2023, were as follows: The 30-year fixed mortgage rate was 6.35%, down slightly from 6.39% last week. The 15-year fixed was 5.75%, unchanged from 5.76% last week.
Home sale data for April will be released next week by the California Association of Realtors and the National Association of Realtors.

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