Dow went up 254, advancers over decliners 3-2 & NAZ gained 270. The MLP index added 1 to the 203s & the REIT index did little in the 466s. Junk bond funds were mixed & Treasuries had much more selling, driving the 10 year yield up to 2.37%. Oil was fractionally lower to 111 & gold fell 7 to 1921 (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)
The average rate on the popular 30-year fixed mortgage hit 4.72% , moving 26 basis points higher since just Fri, according to Mortgage News Daily. As a result of the recent spike in rates, economists are now lowering their home sales forecasts for this year. Most estimates at the end of last year had the average 30-year mortgage rate hitting 4.5% by the end of 2022, but the war in Ukraine, rising oil prices & inflation have all lit a fire under interest rates. Last year at this time, rates were about 3.45%. A shift in the policy outlook from the Federal Reserve, suggesting far more rate increases than expected, is pushing bond yields higher. The 30-year fixed mortgage follows loosely the yield on the 10-year US Treasury, which is now at the highest level since May 2019. “Rates have a small chance to top out before hitting 5% and a good chance of topping out before hitting 6%,” said Matthew Graham, chief operating officer at Mortgage News Daily. “It is a rapidly moving target in this environment, where we legitimately and unexpectedly find ourselves needing to be concerned with inflation for the first time since the 1980′s.” Economists had expected the rate to rise only slightly this year, but now that is changing. Lawrence Yun, chief economist for the National Association of Realtors (NAR), now says he expects the rate to hover around 4.5% this year, after previously predicting it would stay at 4%. NAR's latest official prediction is for sales to drop 3% in 2022, but Yun now says he expects they will fall 6-8% (NAR has not officially updated its forecast). The rise in rates comes on top of an already sizzling housing market. Demand remains strong & supply remains historically low. This has pressured home prices, which were already up 19% in Jan year over year, the latest read from CoreLogic.
Mortgage rates are surging faster than expected, pushing economists to lower home sales forecasts
Glimmers of hope for Nike (NKE), a Dow stock, in China could be good news for other retailers with big business in
the region, as companies contend with a prolonged pandemic recovery &
global unrest. Its shares climbed after the sneaker giant said its China business is improving in spite of recent backlash against Western brands & a shortage of merchandise in the marketplace. NKE showed, at least
for now, it is handling broader macroeconomic challenges, including
ongoing supply chain backlogs, better than many had anticipated. For the 3-month period ended Feb 28, sales in China fell 8% year over year, better than the 12% drop that was anticipated. It was also a marked improvement from the 24%
drop booked in the prior qtr. China has notably been
NKE's most profitable market. Management explained the steps the company has taken to win
shoppers' favor overseas. In fiscal Q4, CFO Matthew Friend said NKE expects to see sequential
improvement in China as it continues to monitor a recent uptick in
Covid cases & renewed lockdowns. For its current fiscal year, NKE reiterated its expectations for sales
to grow mid-single-digits from the prior 12-month period. Analysts had
forecast revenue to be up 5.3%. The stock rose 2.92.
If you would like to learn more about NKE click on this link:
club.ino.com/trend/analysis/stock/NKE_aid=CD3289&a_bid=6ae5b6f
Nike sees signs of recovery in China, which could be a good omen for other retailers
Pfizer (PFE) will supply up to 4M courses of its oral Covid-19 treatment to dozens of poorer nations under an agreement with the
United Nations Children's Fund, the company announced &
expects to start supplying the antiviral pills, Paxlovid, to UNICEF
beginning next month. It will continue to do so thru the end of the
year. Low-income nations will receive the
pills at a not-for-profit price, while upper-middle-income nations will
pay more under a tiered pricing system. PFE
has licensed Paxlovid thru the Medicines Patent Pool, a UN-backed
public health organization, which will allow other companies to produce a
generic, low-cost version of the Covid treatment to boost supply in
lower-income nations throughout the world. So far 35 companies in 12 nations
across Latin America, the Middle East as well as South & East Asia
have signed agreements to either produce the raw ingredients or the
finished drug. The agreement with UNICEF will supply Paxlovid to
the same 95 low- & middle-income nations targeted by the licensing
agreement. The goal is to provide short-term access to the oral
antiviral treatment as companies get the generic manufacturing up &
running. PFE expects $22B in sales for Paxlovid in 2022 based on deals
already signed or close to finalization. The drugmaker has agreed to
supply 20M courses of Paxlovid to the US gov thru
Sep. The stock was off 1.10.
If you would like to learn more about PFE click on this link:
club.ino.com/trend/analysis/stock/PFE_aid=CD3289&a_bid=6ae5b6f
Pfizer to supply 4 million Covid antiviral treatments to poorer nations
Russian sanctions are now hurting American farmers in a big way. Russia's responsible for a large chunk of the fertilizer market — & Moscow is no longer willing to sell to the West. Mike Gunderson's family has been farming wheat, soybeans & corn in northwest Minnesota since the 1950s. "Everything
was going up drastically because of supply shortages, high energy cost.
I was setting a lot of stuff up. Now you start eliminating some other
markets that you got products out of, and it’s getting to be very
scary," Gunderson said. He expected the weather to throw him a curveball in farming, but not a war. "All the stuff in Ukraine, there is so much volatility in the market," Gunderson added. The
US imported an estimated $10.3B worth of fertilizer for crops
in 2021. Of it, $1.3B came from Russia — which is now off the
market. "Some
farmers may have purchased a lot or put some fertilizer down. So, they
might be in great shape, and some might not have put anything on, and
they’re the ones [the war is] really going to affect a lot," Gunderson
said. Farmers typically lay down fertilizer at least twice a year, according to the Minnesota Association of Wheat Growers. "There’s a lot of fertilizers that are four and five times more
expensive than they were a year ago," the group's CEO, Charlie Vogel,
said. "Fertilizer has drastically outpaced the rate of inflation." Vogel
said some farmers have pre-bought fertilizer, but many are worried they
won’t be able to get enough to keep their crops going. "The
majority have probably secured fertilizer for their needs, but just
because you’ve secured it doesn’t mean … all those tons were secured
with the assumption that the world would be somewhat normal," Vogel added.
PLOT THICKENS: Putin's war set to raise consumer costs even more — for expected industry
Gold futures ended with a loss, pressured by a rise in Treasury yields to levels last seen in 2019. The move for the precious metal comes a day after Federal Reserve Chair Jerome Powell said policy makers could deliver ½ percentage point interest rate hikes at future policy meetings in a bid to rein in US inflation which is at levels not seen in 40 years in the wake of the coronavirus pandemic. Gold for Apr fell $8 to settle at $1921 an ounce on Comex after eking out a gain yesterday. Powell, at an economic conference yesterday, said that while no decision had been made, the Fed was prepared, if necessary, to raise rates in increments of more than 25 basis points, or a qtr percentage point. Some policy makers have already called for such a move. St Louis Fed Pres James Bullard dissented in favor of a ½-point rise at last week’s policy meeting, when the Fed delivered a 25 basis point increase. Today Bullard said the Fed needs to move aggressively & get US interest rates high enough to where they are “mildly” restricting economic activity to keep inflation under control. Treasury yields soared, with the yield on the 10-year note rising well above 2.30% to its highest level since May 2019. Rising yields can be a negative for gold because they raise the opportunity cost of holding assets that don't offer a yield. The $ has also strengthened so far this week, in reaction to Powell's remarks. A stronger $ can also be a headwind because it makes commodities priced in the unit more expensive to users of other currencies. Gold seems to be finding overall support as a result of the Russia-Ukraine war & other worries.
Gold prices end lower in the wake of Powell’s hawkish rate remarks
US oil futures settled lower, following a climb of more than 7% in the previous session, as investors gauged the prospect of a EU ban on Russian crude imports. West Texas Intermediate crude for Apr fell 36¢ to settle at $111.76 a barrel on the contract's expiration day. session. The May WTI contract, which became the front month at the settlement, lost 70¢ (0.6%) to $109.27. May Brent crude, the global benchmark, edged down by 14¢ to settle at $115.48 a barrel. Oil prices jumped more than 7% yesterday as EU foreign ministers discussed joining the US in banning Russian crude imports. The discussions, however, ended without agreement, with Germany, Europe's largest economy, arguing that the region is too dependent on Russian energy to implement a ban, news reports said. European OECD countries imported close to 4M barrels of crude oil a day from the countries of the former Soviet Union in Q4-2021, with the lion's share likely to have come from Russia. Oil traders also await weekly updates on US petroleum supplies from the American Petroleum Institute & Energy Information (EIA). The forecast is for the EIA to report that US crude supplies were unchanged for last week
Oil prices settle lower as traders weigh prospect of EU ban on Russian crude
Stocks started today higher & pretty much maintained those levels for the balance of the session. That suggests traders liked what Powell had to say about higher interest rates being to used to fight inflation. However that fight will take some time & pinch the economic recovery to some degree.
Dow Jones Industrials
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