Dow went up 59, decliners modestly ahead of advancers & NAZ added 7. The MLP index crawled up 1 to the 219s & the REIT index hardly budged at 483. Junk bond funds fluctuated & Treasuries in volatile trading were a little lower in price (but the 10 7ear Treasury is still near a 3% yield). Oil gained 1 to 108 & gold shot up 13 to 1987.
AMJ (Alerian MLP index tracking fund)
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Sharply rising mortgage rates are taking their toll on the nation's homebuilders, as already pricey new construction becomes even less affordable. Builder confidence in the market for new single-family homes fell 2 points to 77 in Apr, according to the National Association of Home Builders/Wells Fargo Housing Market Index (NAHB). Any reading above 50 is considered positive sentiment, but the reading marks the 4th straight month of declines for the index, which stood at 83 in Apr 2021. Of the index's 3 components, current sales conditions fell 2 points to 85. Buyer traffic dropped 6 points to 60 & sales expectations in the next 6 months increased 3 points to 73 following a 10-point drop in Mar. “Despite low existing inventory, builders report sales traffic and current sales conditions have declined to their lowest points since last summer as a sharp jump in mortgage rates and persistent supply chain disruptions continue to unsettle the housing market,” said NAHB Chair Jerry Konter. The average rate on the 30-year fixed mortgage stood at around 3.90% at the beginning of Mar & is now up to 5.15%, according to Mortgage News Daily. That is the highest rate in more than a decade. The rate loosely follows the yield on the 10-year Treasury, which has been on the rise, but is also being impacted as the Federal Reserve pulls out of the mortgage-backed bond market. Elevated mortgage rates are only exacerbating high prices for both new & existing homes. The median price of a newly built home in Feb was up over 10% from the year prior. “The housing market faces an inflection point as an unexpectedly quick rise in interest rates, rising home prices and escalating material costs have significantly decreased housing affordability conditions, particularly in the crucial entry-level market,” said NAHB Chief Economist Robert Dietz.
Homebuilder sentiment drops for fourth straight month due to rising rates
The benchmark 10-year Treasury yield rose to a level not seen in more than 3 years, as traders continued to assess rising inflation. The yield on the 10-year Treasury note last rose 2 basis points to 2.828%. Earlier today it reached its highest level since late 2018, trading at 2.884% at one point. The yield on the 30-year Treasury bond was flat at 2.926%. Yields move inversely to prices & 1 basis point is equal to 0.01%. Investors continue to assess inflationary pressures. Last week, the Census Bureau reported a 0.5% gain in Mar a little less than the 0.6% gain expected. The biggest driver of sales came from gas stations. On Wed, the Bureau of Labor Statistics reported that the Mar producer price index which tracks prices paid by wholesalers, rose 11.2% on the previous year, its biggest gain since 2010. That reading came a day after the latest consumer price index, which showed prices inflated 8.5% in Mar from the same time last year, its biggest increase since 1981. But core CPI for the month rose just 0.3%, which was below the 0.5% inflation forecast.
10-year Treasury yield rises to highest level in more than three years
US natural gas prices surged to the highest level in more than 13 years as Russia's war on Ukraine causes a global energy crunch & as forecasts called for cooler spring temperatures. Futures jumped more than 6% to trade as high as $7.80 per M British thermal units, the highest since 2008. The jump builds on recent strength, with natural gas coming off 5 straight positive weeks. For the year, US natural gas prices are now up 102%, which is adding to inflationary concerns across the economy. The move is less extreme than in Europe, where natural gas futures have risen to record levels as the bloc scrambles to move away from dependence on Russian energy. The US is now sending record amounts of liquified natural gas to Europe, which is lifting prices. Amid the jump in prices producers have kept output under control 7 & inventory in storage is below the 5-year average.
Natural gas surges to highest level since 2008 as Russia's war upends energy markets
Dow Jones Industrials
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