Dow bounced back 311 (but 100 below earlier highs), advancers over decliners 3-1 & NAZ recovered 272. The MLP index rose 3+ to the 198s & the REIT went up 5 to the 469s. Junk bond funds traded higher & Treasuries were steady. Oil jumped 1+ to the 87s (another 7 year high) & gold dropped 20 to 1831.
AMJ (Alerian MLP index tracking fund)
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Rising interest rates are causing big headaches for mortgage lenders, especially those who depend most on refinance business. Demand is simply drying up. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647K or less) increased to 3.72% from 3.64%, with points decreasing to 0.43 from 0.45 (including the origination fee) for loans with a 20% down payment. That rate was 77 basis points lower the same week one year ago. As a result mortgage refinance applications, which are highly sensitive to daily rate moves, fell 13% for the week & were 53% lower year over year, according to the Mortgage Bankers Association's seasonally adjusted index. Rates have now been moving higher for 5 straight weeks. “After almost two years of lower rates, there are not many borrowers left who have an incentive to refinance,” wrote Joel Kan, an MBA economist. “Of those who are still in the market for a refinance, these higher rates are proving much less attractive to them.” Mortgage applications to purchase a home fell just 2% for the week & were 11% lower than a year ago. Buyers are actually more active now than usual, as some are hoping to get a jump on the popular spring market. With mortgage rates rising & home prices still soaring, some are concerned they will no longer be able to afford the home they want.
Mortgage refinance demand plunges 13% as interest rates climb toward two-year high
Omicron has almost completely replaced the previously dominant delta variant of Covid-19 in England, a new study has found, with the vast majority of cases being possible reinfections. Imperial College London's REACT study — which has been updated monthly since May 2020 & is funded by the UK gov — analyzed 100K PCR test results from across England. Swabs were collected between Jan 5-20. The study found that 99% of sequenced positive swabs came from people infected with the omicron variant, with only 1% of infections being caused by the delta variant. “We observed unprecedented levels of infection with SARS-CoV-2 in England in January 2022 and almost complete replacement of delta by omicron,” the study said. 2/3 of the 3582 participants who tested positive in Jan reported that they had already tested positive for Covid in the past. A further 7.5% of infected participants said they suspected they had previously had the virus, but had not had this confirmed with a test. When previous variants of Covid were circulating among populations, it was thought that a prior Covid infection, in which people had caught the virus & recovered, could offer some protection from reinfection. But there is concern that this is not the case with omicron, with UK health officials estimating in Dec that the risk of reinfection with omicron is 5.4 times greater than it is with the delta variant. Researchers noted that omicron’s infectiousness had now led to the highest Covid prevalence ever observed in the REACT study. “Vaccination (including the booster campaign) remains the mainstay of the defense against [Covid-19] given the high levels of protection against hospitalizations,” the research team said. “However, further measures beyond vaccination may be required if the very high rates of omicron infection persist, despite omicron appearing to be intrinsically less likely to cause severe disease.”
More than two-thirds of omicron cases are reinfections, English study suggests
The Commerce Dept said a global survey of semiconductor chip producers & users shows a shortage will persist, sparked primarily by wafer production capacity constraints. The voluntary survey of 150 companies last fall in the supply chain confirmed "there is a significant, persistent mismatch in supply and demand for chips, and respondents did not see the problem going away in the next six months." Commerce Secretary Gina Raimondo told reporters that the dept "in a few instances didn't really get what we needed and we're going to go company by company and do personal engagement and get what we need." She said in Nov that she had spoken to "all of the CEOs in the supply chain - including Samsung, TSMC , SK - & all of the CEOs have pledged to me that they will be submitting robust & complete data flows to us." Some companies in Asia & govs had earlier expressed concern about the data request. Raimondo reiterated that the dept could invoke its legal authority to get responses. Taiwan's Economy Ministry, responding to the survey, reiterated that Taiwanese companies are working hard to produce chips & coordinating with "important international business partners" to strengthen supply chains. The Ministry of Economic Affairs & our country's chip makers attach great importance to cooperation with like-minded partners, and will continue to work together to build a safe, trustworthy & resilient supply chain, which should be able to gradually alleviate market growth demand in the next few years. "Demand for chips is high. It is getting higher," Raimondo said, adding demand is now about 20% above 2019 levels. "There is not a lot of good news" in this survey, she added.
US Commerce Dept says chips shortage to persist, will review some prices
The volatility index which had been in the mid teens is now 30 & was even higher on Mon & Tues. Investors are very nervous about what the Fed will say later As mentioned above, higher interest rates are already being felt with lower mortgage refinancing. The Fed's words later will carry a lot of weight in the stock market.
Dow Jones Industrials
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