Dow dropped 197 (but above early lows), decliners over advancers better than 2-1 & NAZ was off 51. The MLP index crawled up to 222 & the REIT index pulled back 5+ to the 439s. Junk bond funds fluctuated & Treasuries were heavily sold, raising yields (more below). Oil jumped 3 to the 118s (more below) & gold fell 9 to 1847.
AMJ (Alerian MLP index tracking fund)
Price drops are "becoming increasingly common" in some of the most popular housing markets across the US. According
to new Redfin data, more than 20% of home sellers dropped their price
in 7 of the 10 most popular migration destinations last month: Cape
Coral, Florida; Sacramento, California; North Port, Florida; Tampa,
Florida; Atlanta, Georgia; San Antonio, Texas & Phoenix, Arizona. Although
the price drops are becoming more common, they are the result of rising
mortgage rates, which is pricing out buyers & driving down demand. "When
mortgage rates were at or below 3%, both local and out-of-town
homebuyers were more willing and able to tolerate high prices, but at
5%, many are now priced out," Redfin chief economist Daryl
Fairweather said. "A home’s price is driven by the
balance of supply and demand, and when demand drops off and supply
increases like it is now, rapid price increases evaporate quickly." Areas that saw a huge surge in migration & sharp increases in home
prices over the past 2 years are now seeing "an abrupt drop-off in
demand," which is forcing sellers to "drop their prices with increasing
frequency," Fairweather said. In Apr, 41% of home sellers in Boise, Idaho, dropped their price,
which is up 10% compared to a year ago & the largest share of home
sellers in Redfin’s analysis. Over the past 2 years, home prices in the area were up 62%. "For home sellers in these markets, the sharp increase in mortgage
rates has knocked some of the wind out of a housing market that had been
super-charged by surging migration," according to Redfin. In
fact, those aforementioned sellers are "driving the national rate of
price drops to its highest level since October 2019," according to
Redfin.
Home sellers in hot markets are dropping prices as demand wanes
Treasury yields rose as investors continued to weigh rising inflation around the world & the possibility of a slowdown in economic growth. The yield on the benchmark 10-year Treasury note was up 6.1 basis points at 2.81% & the yield on the 30-year Treasury bond rose 3.7 basis points to 3.013%. Yields move inversely to prices & 1 basis point is equal to 0.01%. Euro zone data showed prices rising for a 7th straight month, with inflation coming in at 8.1% for May. Oil prices rose broadly, adding to concerns of strong inflation slowing down economic growth. However, a US inflation reading on Fri indicated that pricing pressures could be starting to ease, which boosted sentiment.
Treasury yields rise as investors weigh inflation and global economic growth
Oil prices jumped after EU leaders reached an agreement yesterday to ban 90% of Russian crude by the end of the year. US crude futures for Jul were trading just under 3% higher at $118.46 per barrel, while Brent crude futures were up 1.44% at $123.42. At one point, US crude rose to $119.42 per barrel — a 12-week high. The agreement resolves a deadlock after Hungary initially held up talks. Hungary is a major user of Russian oil & its leader, Viktor Orban, has been on friendly terms with Russia’s Vladimir Putin. Charles Michel, pres of the European Council, said the move would immediately hit 75% of Russian oil imports. The embargo is part of the EU's 6th sanctions package on Russia since it invaded Ukraine. Talks to impose an oil embargo have been underway since the start of the month. “The European Council agrees that the sixth package of sanctions against Russia will cover crude oil, as well as petroleum products, delivered from Russia into Member States, with a temporary exception for crude oil delivered by pipeline,” according to a May 31 statement from the European Council. The European Council added that in case of “sudden interruptions” of supply, “emergency measures” will be introduced to ensure security of supply. Roughly 36% of the EU's oil imports come from Russia, a country that plays an outsized role in global oil markets.
Oil prices jump after EU leaders agree to ban most Russian crude imports
Dow Jones Industrials
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