Dow gave back 6 with buying in the last hour of trading, decliners over advancers 5-4 & NAZ went up 94. The MLP index dropped 3+ to the 198s & the REIT index continued steady in the 472s. Junk bond funds were little changed & Treasuries had more selling, raising yields. Oil pulled back t o the 82s after its recent rise & gold was off 3 to 1781 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
House Speaker Nancy Pelosi said that Dems are "rounding the turn" on a massive social spending bill as the 2 warring factions of the party debate how to cut at least a T$ from Pres Biden's signature economic plan. "We’re almost to the stretch," Pelosi told reporters. "We’re rounding the turn. And we're making
great progress to our goal of securing framework agreement for Build
Back Better in a timely fashion." Moderate & progressives have
been haggling for weeks over what began as a $3.5T family &
climate plan, fighting over which programs to remove entirely & which
programs to aggressively pare back. Lawmakers have said they hope to
reach a deal by the end of the week. Although it's unclear what the final proposal may look like, it's
expected to be significantly smaller than the original one floated by
the White House: Pres Biden reportedly discussed a topline figure
with Dems this week that would be somewhere $1.7T & $1.9T. The narrower package includes many of the original plan's proposals,
including universal pre-K, substantial investment in green energy &
expanded Medicare benefit; however, the details are still subject to
change. Still, it may eliminate, or weaken, several
key programs favored by progressives, including free community college,
less money for affordable public housing & a child tax credit
extension of just one year. "Although it's a smaller bill, it's
still historic, transformation and will make an enormous difference in
the lives of working families," Pelosi said, adding: "And it will pass
soon." With a 50-50 split in the Senate & just 3
votes to spare in the House, Dems need to essentially vote in
lockstep to ensure the package passes. Dem leaders have set an Oct 31 deadline to reach an agreement on
the spending plan & a separate $1.2T bipartisan
infrastructure deal.
Pelosi promises Democrats will pass spending plan 'soon' amid infighting
US employers reported significant increases in prices & wages even as economic growth decelerated to a "modest to moderate" pace in Sep & early Oct, the Federal Reserve said in its latest compendium of reports about the economy. "Outlooks for near-term economic activity remained positive, overall, but some Districts noted increased uncertainty and more cautious optimism than in previous months," according to the summary from the Fed's 12 regional districts, prepared as part of a broad range of briefings ahead of policymakers' Nov 2-3 meeting. Employment increased, though labor growth was dampened by a low supply of workers, despite wage increases designed to attract new hires & keep existing employees. Most districts reported "significantly elevated prices," with some expecting prices to stay high or increase further & others expecting inflation to moderate. "Many firms raised selling prices indicating a greater ability to pass along cost increases to customers amid strong demand," the Fed districts reported. Policymakers are poised to begin reducing their $120B in monthly asset purchases as soon as next month after what most see as substantial improvement in the labor market since the end of last year. The report isn't likely to alter that decision, but it does expose the tensions Fed policymakers face as they move beyond the taper & begin contemplating when to raise rates. Inflation has been running well above the Fed's 2% target for the last several months. Fed Governor Randal Quarles yesterday said current high inflation may test the Fed's patience as it leaves rates low to encourage hiring. His current view, like that of most of his colleagues, is that inflation will subside next year. But if wages start to push prices into an upward spiral, or inflation expectations begin to get unmoored, he said, the Fed may need to act sooner to raise rates. Policymakers are keenly focused on the drivers of those price rises & whether they will, as most expect, recede next year. If current high inflation persists, the Fed may need to start raising rates sooner than widely assumed, several policymakers have said recently.
Fed report shows wage pressures amid 'modest to moderate' economic growth
Sales of previously owned homes increased 7% to a seasonally adjusted annualized rate of 6.29M units in Sep, according to the National Association of Realtors (NAR). The NAR's chief economist, Lawrence Yun, pointed to a brief drop in mortgage interest rates in Aug for the sales gain. The average rate on the 30-year fixed fell below 3% before rising again more significantly in the last month. Existing-home sales data is based on closed sales, representing contracts likely signed in Jul & Aug. Sales were 2.3% lower than in Sep 2020. First-time buyers made up just 28% of sales, the lowest level since Jul 2015. The supply of homes for sale ended Sep at 1.27M units, down 13% from a year ago, representing a 2.4-month supply at the current sales pace. Low supply continued to push prices up. The median price of an existing home sold in Sep was $352K. That is 13.3% higher than Sep 2020. The annual gains, while high, are now moderating. “As mortgage forbearance programs end, and as homebuilders ramp up production – despite the supply-chain material issues – we are likely to see more homes on the market as soon as 2022,” said Yun. That median price is heavily influenced by the mix of homes currently selling. Most of the activity is on the higher end of the market, as inventory is weakest at the low end. For example, sales of homes priced between $100-$250K were 23% lower year over year, while sales of homes priced above $1M were 30% higher. Sales of newly built homes in Aug, which are counted by signed contracts & so would be comparable to Sep's existing sales numbers, were 24% lower year over year. Prices for new homes were up 20% as builders struggle with supply chain issues & higher costs for land, labor & materials.
Sales of existing homes rose in September, likely due to a brief decline in mortgage rates
Gold futures settled with a loss, on the heels of a 2-session climb, as investors took a step back from buying that has been supported by concerns over a rise in inflation. Gold is seen as a hedge against rising inflation around the world, a factor that has allowed bullion to gain some traction higher despite growing concerns about pricing pressures. Dec gold fell $3 to settle at $1781 an ounce, after rising 0.8%. A persistent rise in Treasury yields, with the 10-year Treasury note around its highest yield since May & a rise in the $ yesterday, weighed on bullion prices. The moves for both followed data showing new US jobless claims dropped by 6K to 290K last week. Separately, the Philadelphia Fed said its gauge of regional business activity fell to 23.8 in Oct from 30.7 in the prior month. Still, the $ traded lower for the week.
Gold prices finish lower after two day advance
Oil futures finished lower, with US benchmark crude posting its first loss in 6 sessions, on profit-taking for the pullback in prices from multiyear highs. West Texas Intermediate crude for Dec fell 92¢ (1.1%) to close at $82.50 a barrel. The Nov contract expired yesterday at a 7-year high, up a 5th session in a row. Dec Brent crude the global benchmark, declined by $1.21 (1.4%) to $84.61 a barrel after finishing yesterday at its highest since Oct 2018. Profit-taking aside, the trajectory for crude still looks bullish for the rest of the year thanks to rising demand & a tight production policy by the Organization of the Petroleum Exporting Countries & its allies (OPEC+). OPEC+ members have struggled to meet production quotas after agreeing this summer to begin easing existing output cuts in monthly increments of 400K barrels a day.
U.S. oil benchmark ends lower, taking a break from its rally to 7-year highs
Dow Jones Industrials
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