Dow soared 594 (more below), advancers over decliners 7-1 & NAZ shot up 352. The MLP index gained a very big 9+ to the 196s & the REIT index jumped 8+ to the 398s. Junk bond funds were bid higher & Treasuries saw more selling bringing higher yields (more below). Oil rose 2+ to the 112s & gold continued steady at 1841.
AMJ (Alerian MLP index tracking fund)
Sales of existing homes in May dropped 3.4% to a seasonally adjusted annualized rate of 5.4M units, according to the National Association of Realtors (NAR). Sales were 8.6% lower than in May 2021. Apr's sales were revised slightly lower as well. This is the weakest reading since Jun 2020, which was during the early months of the Covid pandemic. Adjusting for that, it is the lowest since Jan 2020. This reading is based on closings during the month, tMarkets rebound following higher markets in Asia and Europeherefore representing contracts likely signed in Mar & Apr. During that time the average rate on the 30-year fixed mortgage rose from right around 4-5.5%. It is currently right around 6%, according to Mortgage News Daily. Rising rates, along with rapid home price appreciation & continued low supply, have given affordability a triple punch. “I do anticipate a further decline in home sales,” said Lawrence Yun, chief economist at NAR. “The impact of higher mortgage rates are not yet fully reflected in the data.” There were 1.16M homes for sale at the end of May, an increase of 12.6% month to month but still down 4.1% from May 2021. At the current sales pace, that represents a 2.6-month supply. Low supply continued to push home prices higher. The median price of a house sold in May was $407K, an increase of 14.8% from May 2021, the is the highest price on record since the Realtors began tracking it in the late 1980s. Supply is leanest on the lower end of the market, which is likely why activity there continues to be weaker than on the higher end. Sales of homes priced $100-250K dropped 27% from a year ago. Sales of homes priced $750K-$1M were up 26%. Sales of homes priced above $1M surged 22% year over year.
Sales of existing homes fell in May, and more declines are expected
Treasury yields rose as traders weighed a fresh batch of economic data as central banks around the world tighten monetary policy. The yield on the benchmark 10-year Treasury note was 6 basis points higher at 3.3%, while the yield on the 30-year Treasury bond traded 9 basis points higher at 3.382%. Yields move inversely to prices. The Philadelphia Federal Reserve nonmanufacturing survey showed activity expanded in the region this month. However, expectations for future growth declined, the Philadelphia Fed said. “Although the future indexes declined, the responding firms continue to expect growth over the next six months overall,” the bank said. Today's trading session comes after a volatile week that saw major central banks signal a more aggressive effort to curtail soaring inflation.
U.S. Treasury yields rise to start the week
European stocks moved higher, continuing a recovery seen at the start of the week. The pan-European Stoxx 600 index added 0.5%, paring earlier gains of more than 1%. Autos climbed 1.3% to lead gains while utilities slipped 1.1%. The positive trade for Europe comes as global markets appear to be staging a comeback rally after a tumultuous week last week. Asia-Pacific markets were mostly buoyant overnight & bitcoin continued a recent rebound while US stock futures also rose. The rebound in positive sentiment comes after global market turbulence as investors assessed the prospect of more aggressive Federal Reserve rate hikes & rising chances of a recession. Last week, there was a flurry of central bank action, with the Fed raising its benchmark funds rate by 75 basis points, its largest hike since 1994. The Bank of England also implemented its 5th rate rise in a row, the Swiss National Bank surprised markets with a 50 basis point hike & the ECB also announced that it plans to create a new tool to tackle the risk of euro zone fragmentation.
European markets climb, following positive global sentiment
Dow Jones Industrials
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