Amazing Resiliency: The Weekly Market Update

Bull Keeps Roaring
Bull Keeps Roaring

Bull Keeps Roaring

Earlier this month, the bull market in stocks became the second strongest in history with a gain of over 260% from the bottom reached in 2009. It was already the second longest bull market in history. This is still way short of the strongest bull market in history, which achieved gains of almost 600% for the period of 1987 to 2000, but still very, very impressive. The secret to this market’s success? Steady growth with low inflation. Of course, you can also add that this bull market followed precipitous drops during the financial crisis and thus much of it was clawing its way back up.

Regardless of where it has come from, stocks have moved a long way through significant challenges and the question on everyone’s mind is — how long can this rally go on? As you would guess, there are opinions on both sides, with many analysts saying there is room to run, and others saying that stocks are being inflated by artificially low rates courtesy of the Federal Reserve Board.

The Fed met last week amid this rally, but at the same time also had to consider additional challenges, such as national disasters and a ramp-up of international tensions. The Fed’s decision to keep short-term interest rates unchanged and begin the paring of assets in October was right in line with pre-meeting expectations, though some had hoped for a delay based upon the recent challenges. Is the Fed justified in keeping rates so low, or should they hold off on the next hike expected in December — until they see how well our economy recovers longer-term from the hurricanes which have hit so hard? Only time will tell, as we cannot predict the future any better now than we could in 2009.

The Weekly Market Update

As we predicted last week based upon trends, rates on 30-year fixed loans rose from their lowest levels of the year. For the week ending September 21, Freddie Mac announced that 30-year fixed rates rose to 3.83% from 3.78%. The average for 15-year loans increased to 3.13%, and the average for five-year adjustables moved up to 3.17%. A year ago, 30-year fixed rates averaged 3.48%.

Attributed to Sean Becketti, chief economist, Freddie Mac — “The 10-year Treasury yield continued its upward trend, rising 7 basis points this week. As we expected, the rate on 30-year loans followed suit, increasing 5 basis points to 3.83 percent. This week’s uptick in the 30-year rate ends a nearly two-month streak of declines.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.