10-Year Treasury Yield
U.S. Treasury yields were little changed on Thursday as investors looked to economic data that could provide fresh hints about the outlook for the economy and inflation. The yield on the 10-year Treasury added 8 basis points to 3.689%. The 2-year Treasury was last trading at 4.126% after rising by around 2 basis points. Yields and prices move in opposite directions and one basis point equals 0.01%.
CPI
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Jobless Claims
Initial filings for unemployment insurance ticked higher last week but remained generally low in a tight labor market. Jobless claims for the week ended March 25 totaled 198,000, up 7,000 from the previous period and a bit higher than the 195,000 estimate, the Labor Department reported Thursday. Though the number was slightly higher than expectations, the total indicates that companies are slow to lay off workers despite expectations that the unemployment rate will rise through the year. Continuing claims, which run a week behind, edged up 4,000 to 1.689 million. That was below the FactSet estimate for 1.6935 million. The four-week moving average of weekly claims, which smoothes volatility in the numbers, edged up to 198,250, but has been below 200,000 since mid-January. The relatively benign claims numbers come despite aggressive Federal Reserve efforts to slow down inflation. In large part, the central bank is targeting a labor market beset by a sharp supply-demand imbalance in which there are nearly two open jobs for every available workers.
GDP
A separate economic report Thursday showed that growth was a bit less strong to closer 2022 than previously thought. The final Commerce Department reading for gross domestic product showed the economy grew at a 2.6% annualized rate in the fourth quarter, slightly below the previous estimate of 2.7%. That change came primarily due to downward revisions in consumer spending and exports, the department said. Growth likely accelerated for the first three months of 2023, according to the Atlanta Fed’s GDPNow tracker. That gauge shows GDP rising at a 3.2% pace. According to estimates last week, central bankers expect the unemployment rate to rise to 4.5% this year, from its current 3.6% level. Doing so would require the loss of more than 540,000 jobs, according to an Atlanta Fed calculator.
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Cosnumer Spending
Consumer spending increased 0.2%, compared to the 0.3% estimate.
Core PCE
Key Fed inflation gauge rose 0.3% in February, less than expected. An inflation gauge the Federal Reserve follows closely rose slightly less than anticipated in February, providing some hope that interest rate hikes are helping ease price increases. The personal consumption expenditures price index excluding food and energy increased 0.3% for the month, the Commerce Department reported Friday. That was below the 0.4% Dow Jones estimate and lower than the 0.5% January increase. On a 12-month basis, core PCE increased 4.6%, a slight deceleration from the level in January. Including food and energy, headline PCE increased 0.3% monthly and 5% annually, compared to 0.6% and 5.3% in January. The softer than expected data came with monthly energy prices decreasing 0.4% while food prices rose 0.2%. Goods prices rose 0.2% while services increased 0.3%. In other data from the report, personal income increased 0.3%, slightly above the 0.2% estimate.
Fixed Mortgage Rates
Mortgage rates fell for the third consecutive week as market uncertainty lingered.The rate on the average 30-year fixed mortgage dropped to 6.32% from 6.42% the week prior, according to Freddie Mac. Rates have slid 41 percentage points in the past three weeks, following the 10-year Treasury yield as the turmoil among banks unfolded.The drop continues to provide a window of opportunity for budget-conscious homebuyers, but affordability and inventory challenges remain, especially as competition heats up.“There was a sharp increase in competition this month, within three weeks the housing market accelerated, and we got an influx of pre-approvals during the days where rates dipped,” Adriana Perezchica, president of Via Real Estate Group, told Yahoo Finance. “But there’s just no inventory and rates continue to be elevated. It’s still a difficult time for buyers seeking affordability.”
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