Economic update for the month ending September 30, 2022Stock markets suffered their worst monthly losses since the announcement of the pandemic shutdowns- September marked the worst month for the
Jul 2 2022 38376 1
Dated: July 2 2022
Economic update for the month ending June 30, 2022
Stock markets slid in June - Stock markets closed the first half of 2022 with their largest losses in 50-years- June was a tumultuous month for the stock markets. Stocks, bond yields, and mortgage rates stabilized in May. That was because economic data showed inflation moderating in April. For example, the CPI in March was 8.5%, the highest rate since 1982. In April, the CPI dropped to 8.3% leaving investors feeling that rate hikes and other tightening measures the Fed enacted were working. In the second week of June May's CPI reading of 8.6%, the highest rate of inflation since 1981, was released. Stocks immediately began to sink and Treasury bond yields and mortgage rates rose, as the economy had not slowed in a way to tame inflation as previously hoped. In a response to the May CPI report the Federal Reserve increased its key rates by .75%, the highest single meeting increase in decades. Consumer confidence also slipped to the lowest level in forty years as consumers are feeling the impact of higher prices. The June CPI report will be released on July 13. Other data over the last week of June points to some moderating of inflation and if that data turns out to be correct, stocks may recover some of their losses. Bond yields and mortgage rates dropped significantly in the final days of the month based on expectations that a slowing economy will tamper information. If the CPI stays at 8.6% or increases, we would expect stocks to fall further and bond yields and mortgage rates to increase.
The Dow Jones Industrial Average closed the month at 30,776.43, down 6.7%from 32,990.12 on May 30. It's down 15.3% year-to-date. That is the worst performance for the Dow for the first half of a year since 1962.The S&P 500 closed the month at 3,785.39, down 8.4%from 4,132.15 last month. The S&P is down 20.6% year-to-date. This marked the worst performance for the S&P over the first half of a year since 1970.The NASDAQ closed the month at 11,028.74, down 8.3%from 12,081.39 last month. It is down 29.5%, year-to-date. It was the worst first half of a year ever for the NASDAQ.
U.S. Treasury bond yields - The 10-year treasury bond closed the month yielding 2.98%, upfrom 2.85% last month.The 30-year treasury bond yield ended the month at 3.14%, upfrom 3.07% last month. We watch bond yields because mortgage rates often follow treasury bond yields. Bond yields dropped sharply over the last week of the month. The 30-year peaked at 3.45%, and the ten-year hit 3.49% in the middle of June.
Mortgage rates- TheFreddie Mac Primary Mortgage Surveyreported that mortgage rates as of June 30, 2022 for the most popular loan products were as follows:The 30-year fixed mortgage rate was 5.70%, upfrom 5.09% at the end of May.The 15-year fixed was 4.83% up from4.31% last month. The 5-year ARM was 4.50%, up from 4.20% last month. Rates dropped quite a bit on Wednesday and Thursday. Currently the 30-year is under 4.5%. Next week's survey rates will be back down in that range.
The June jobs report will be released on Friday June 8. This is the May report
The U.S. economy added 390,000 new jobs in May - The Department of Labor and Statisticsreported that 390,000new jobswere added in May. Theunemployment rateheld steady at3.6%. Thelabor-force participation rate(the share of workers with a job or actively looking for a job) increased to62.4%in May, up from 62.2% in April. It is well below the 63.6% level before the pandemic. Average hourlywages increased 5.2%from May 2021, down from a 5.5% year-over-year increase in April which is another sign that inflation may be moderating.
U.S. existing-home sales - The National Association of Realtorsreported that existing-home sales totaled5.41 million unitson a seasonally adjusted annualized rate inMay, down 3.4%month-over-month from the annualized number of sales in April. Year-over-year sales were down 8.6% from the annualized rate of 5.92 million in May 2021. Themedian