Dow dropped 249, decliners over advancers better than 2-1 & NAZ was off 55. The MLP index remained close to 221 & the REIT index fell 6+ to the 433s on higher interest rates. Junk bond funds were purchased today & Treasuries ran into more selling, bringing higher Treasury yields. Oil went up 1+ to the 116s & gold slid 2 to 1845.
AMJ (Alerian MLP index tracking fund)
Americans continued to quit their jobs at a rapid pace in Apr, emphasizing how persistent turmoil in the
labor market has made it difficult for employers to fill open positions. The
Labor Dept said that 4.4M Americans, about
2.9% of the workforce, quit their jobs in Apr. That's down slightly
from the high of 4.5M recorded in Mar, but well above the
pre-pandemic level of about 3.6M. Meanwhile, the number of job openings fell slightly to 11.4M by the end of Apr – the 2nd-highest level on record. The
data emphasizes how newly empowered workers are quitting their jobs in
favor of better wages, working conditions & hours as businesses lure
new workers with higher salaries – a new trend dubbed the "Great
Resignation." As a result, Americans' incomes are rising across the
board as employers have ramped up hiring to offset the losses.
Job openings hold near record high as more Americans quit their jobs in April
Mortgage demand slipped to the lowest level since Dec 2018, even after rates declined slightly last week. Applications for a mortgage to purchase a home fell 1% last week compared with the previous week, according to the Mortgage Bankers Association's (MBA) seasonally adjusted index. Volume was 14% lower than the same week one year ago. Despite a slight decline, mortgage rates are significantly higher than they were at the start of this year. This as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647K or less) decreased to 5.33% from 5.46% with points dropping to 0.51 from 0.60 (including the origination fee) for loans with a 20% down payment. “Mortgage rates fell for the fourth time in five weeks, as concerns of weaker economic growth and the recent stock market sell-off drove Treasury yields lower,” said Joel Kan, an MBA economist. Rising interest rates & steep gains in home prices are hitting affordability hard. Prices continue to rise because there is still so little supply on the market, but different tiers of buyers are seeing different pictures. “Demand is high at the upper end of the market, and the supply and affordability challenges are not as detrimental to these borrowers as they are to first-time buyers,” Kan added. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647K) decreased to 4.93% from 5.02%. Jumbo loans are mostly held in investor & bank portfolios, as opposed to being sold to Fannie Mae or Freddie Mac. Lenders see them as less risky given the higher credit quality of the borrower to whom they generally go. Applications to refinance a home loan, which are more sensitive to rate moves than purchase applications, fell 5% for the week & were 75% lower than the same week one year ago. Even as rates moved off their highs over the past few weeks, refinance demand hasn't come back because so many borrowers already went thru the process when rates were sitting at record lows last year.
Mortgage demand hits lowest level since end of 2018, even as interest rates ease
Treasury Secretary Janet Yellen said said she was wrong about the path inflation would take following months of public statements over its perceived threat. "I think I was wrong then about the path that inflation would take," she said. "As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn't at the time fully understand." She cited the COVID-19 pandemic & the Russian invasion of Ukraine as added weight to the economic shock many are feeling. "So really, the shocks to the economy have continued, but inflation is the number one concern for President Biden," Yellen added. In Mar, Yellen appeared to contradict the White House when she said she was expecting another year of "uncomfortably high" inflation. "I think there’s a lot of uncertainty related to what’s going on with Russia and Ukraine and I do think that it’s exacerbating inflation," Yellen said. "I don’t want to make a prediction exactly as to what’s going to happen in the second half of the year, you know, we’re likely to see another year in which 12-month inflation numbers remain very uncomfortably high."
Biden's Treasury secretary makes big admission about inflation
There are plenty jobs available, even if many aren't high paying. Meanwhile the housing market is struggling to some degree which is impacting the low end the hardest. The US economy is holding up fairly well but growth data going forward will be sluggish at best. If Q2 GDP shows negative growth (even with a small number), that would qualify as a mild recession & get headline news.
Dow Jones Industrials
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