Dow went up 61 after a sluggish start, advancers over decliners 5-2 & NAZ gained 178. The MLP index edged higher in the 201s & the REIT index added 3 to the 418s. Junk bond funds were bid higher & Treasuries saw limited buying (more below). Oil was off 1+ to the 102s & gold slid 2 to the 1708s.
AMJ (Alerian MLP index tracking fund)
Mortgage applications decreased last week, the 3rd week in a row, as they now sit at the lowest level since 2000, according to a new survey. The Mortgage Bankers Association (MBA) released its weekly mortgage applications survey that found the Market Composite Index, which measures the volume of loan applications, decreased by 6.3% last week when adjusted to a seasonal basis. On an unadjusted basis, the Index saw a 17% increase compared to the previous week. "Mortgage applications declined, reaching the lowest level since 2000. Similarly, with most mortgage rates more than 2 percentage points higher than a year ago, demand for refinances continues to plummet, with MBA's refinance index also falling to a 22-year low," said Joel Kan, MBA's associate VP of economic & industry forecasting. "Purchase activity declined for both conventional and government loans, as the weakening economic outlook, high inflation, and persistent affordability challenges are impacting buyer demand. The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs." The Refinance Index & Purchase Index saw similar decreases, of 4% & 7% from a week ago, respectively. The Refinance Index now sits 80% lower than a year ago. The FHA share of total applications increased to 12.4%, from 11.7% the week prior, while the VA share of total applications decreased to 10.6% from last week’s 11.2%.
Mortgage demand hits 22-year low as loan applications drop
US existing home sales dropped to a new 2-year low in Jun as rising mortgage rates & the relentless increase in home values slowed activity by pushing prospective homebuyers out of the market. Sales of previously owned homes tumbled 5.4% in Jun from the previous month to an annual rate of 5.1M units, the lowest level since Mar 2020, according to the National Association of Realtors (NAR). It marks the 5th consecutive month that sales have declined. On an annual basis, home sales plunged 14.2% in Jun. Despite the slowdown in sales, the national median home price surged higher in Jun, hitting a new record of $416K. That's up 13.4% from the previous year & is an increased from a revised $408K in May. "Falling housing affordability continues to take a toll on potential home buyers," NAR chief economist Lawrence Yun said. "Both mortgage rates and home prices have risen too sharply in a short span of time."
Existing home sales tumble in June as prices hit another record high
Treasury yields pulled back as investors continue to assess the probable path of monetary policy & whether risk assets have found a bottom. The yield on the benchmark 10-year Treasury note was down at 2.967% while the yield on the 30-year Treasury bond fell to 3.136%. Yields move inversely to prices. The yield on the 2-year Treasury note slid to 3.148%, meaning the closely-watched 2-year/10-year yield curve remained inverted. Yield-curve inversions — when shorter-term gov bonds have higher yields than longer-term ones despite carrying lower risk — are often viewed by markets as signs that a recession is imminent. Markets are attempting to gauge whether the Federal Reserve will hike interest rates by 75 basis points or the more aggressive 100 basis points at its policy meeting next week, as it looks to rein in sky-high inflation. The uncertainty around growth, inflation & the path of monetary policy, alongside a new wave of corp earnings reports, have led to fluctuations in risk assets in recent sessions. Stocks rallied yesterday as some traders bet that stock markets had found a bottom & would be driven higher by stronger-than-expected corp earnings.
Treasury yields dip as risk sentiment remains volatile
Dow Jones Industrials
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