Stock markets surged as key report revealed that inflation moderated in October – The Consumer Price Index (CPI) rose 7.7% year-over-year in October, it’s lowest year-over-year increase since January. The CPI peaked at 9.1% in June, but had remained in the mid 8% level until last month. The Core inflation level, which excludes food and energy costs, was 6.3%, also lower than expected. While still a long way from the 2% Fed target this was a step in the right direction. Mortgage rates dropped over 1/2% on Thursday after the CPI rate was reported and stocks surged. The Dow jumped 1,200 points on Thursday alone. All indexes had steep gains. The Dow Jones Industrial Average closed the week at 33,747.86, up 4.1% from 32,404.22 last week. It is down 7.1% year-to-date. The S&P 500 closed the week at 3,992.93, up 5.9% from 3,770.55 last week. The S&P is down 16.2% year-to-date. The NASDAQ closed the week at 11,323.33, up 8.1% from 10,475.26 last week. It is down 27.6% year-to-date.
U.S. Treasury bond yields – The 10-year treasury bond closed the week, yielding 3.82%, down from 4.17% last week. The 30-year treasury bond yield ended the week at 4.03%, down from 4.27% last week. We watch bond yields because mortgage rates often follow treasury bond yields.
Mortgage rates – The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of November 10, 2022, were as follows: The 30-year fixed mortgage rate was 7.08%, up from 6.95% last week. The 15-year fixed was 6.38%, up from 6.29% last week. The 5-year ARM was 6.06%, up from 5.95% last week. Interest rates dropped sharply on Thursday after the October CPI report showed that inflation dropped to its lowest level since January. Next week’s rates will be lower. The 30-year fixed mortgages was 6.5% by the end of the day on Thursday. Lenders were closed Friday due to Veteran’s Day.