Economic update for the week ending March 12, 2022

Stock markets closed lower for a fifth straight week – The Dow fell for its fifth straight week as investors try to determine just how bad the economic impact the war in Ukraine will have on American companies. Persistent inflation which was going on well before the Russian invasion has been exacerbated by soaring fuel costs as the world has partially cut off Russian oil. The February CPI report was released on Thursday. It showed that consumer prices had risen 7.9% year-over-year in February. That marks the highest inflation rate since 1982. American companies have also joined the boycott and stopped selling goods in Russia. That will impact their profits. It was a tough week for investors. The Dow Jones Industrial Average closed the week at 32,944.19, down 2.0% from 33,614.17 last week. It is down 9.4% year-to-date. The S&P 500 closed the week at 4,204.31, down 2.8% from 4,326.87 last week. The S&P is down 11.8% year-to-date. The NASDAQ closed the week at 12,843.81, down 3.5% from 13,314.44 last week. It is down 17.9%, year-to-date.

U.S. Treasury bond yields - The 10-year treasury bond closed the week yielding 2.00%, up from 1.74% last week. The 30-year treasury bond yield ended the week at 2.36%, up from 2.16% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates - March 10, 2022, Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products were as follows: The 30-year fixed mortgage rate was 3.85%, up from 3.76% last week. The 15-year fixed was 3.01%, up from 3.09% last week. The 5-year ARM was 2.97%, up from 2.91% last week. Following the release of the February CPI report that showed inflation had risen 7.9% year-over-year on Thursday, mortgage rates have risen sharply. The 30-year fixed-rate is well over 4% today.

Initial Jobless Claims

Jobless claims rose 11k to 227k for the week ending March 5th from a revised 216k in the prior week (orig. 215k). The 4-week moving average of headline claims was mostly unchanged at 231.3k. Continuing claims, which lag by a week, rose to 1.494mln from a revised 1.469mln (orig. 1.476mln) for the week of February 28th. Overall, headline claims are modestly above the normal levels pre-pandemic of ~215k, while continuing claims remain significantly lower vs. the prior normal level of ~1.7mln.

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