Dow jumped 346, advancers over decliners better than 3-1 & NAZ gained 259. The MLP index rebounded 8 to the 191s & the REIT index edge up in the 411s. Junk bond funds rose along with stocks & Treasuries was hit with more selling, taking the yield on the 10 year Treasury up 9 basis points to 3.0%. Oil went up 4+ to the 102s & gold added 2 to 1738, the first advance in 8 sessions (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Freddie Mac's latest Primary Mortgage Market Survey shows the average rate on a 30-year fixed mortgage is now at 5.3%. The reading is down from last week's 5.7% average, but still up sharply from a year ago when the 30-year fixed rate sat at 2.9%. The 15-year fixed rate also fell to 4.45%, down from the prior week's average of 4.83% & up from 2.2% the same week last year. "Over the last two weeks, the 30-year fixed-rate mortgage dropped by half a percent, as concerns about a potential recession continue to rise," said Sam Khater, Freddie Mac's chief economist. "While the drop provides minor relief to buyers, the housing market will continue to normalize if home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown," he added. As economic data points to an increased likelihood of a recession, rattled investors are retreating to Treasuries. Mortgage rates are linked to the 10-year Treasury yields & fall with them in tandem. But mortgage rates remain up sharply since the beginning of the year & the recent declines may do little to shore up demand in a cooling real estate market as more would-be buyers are priced out due to high home prices. US households are also feeling added pressure on their budgets due to soaring inflation, which sits at a 40-year high. Consumer sentiment hit a record low last month as Americans' assessments of their personal financial situations tumbled.
Mortgage rates drop for second straight week as recession fears grow
Ukraine’s Pres Volodymyr Zelenskyy said that Western artillery given to Ukraine is finally starting to have an impact on Russia's slowly advancing forces. Meanwhile, a top Russian official has warned the US against punishing Russia's actions in Ukraine, saying it risks incurring the wrath of God if it does so. Heavy shelling continued along the Donetsk front line yesterday, although Russian forces made limited gains, according to an intelligence update from Britain's Ministry of Defense, with Russia’s forces likely to be re-forming after last week's heavy fighting. Russia has turned its attention to capturing more parts of the Donetsk region of the Donbas, having already seized the neighboring Luhansk province. Donetsk is now experiencing heavy shelling, the same strategy that Russian forces used in Luhansk. Sloviansk, Kramatorsk & Bakhmut are now Russia's key targets. Sloviansk, in particular, has found itself on the front line as Russian forces advance. The British defense ministry said yesterday that the battle for the city will be the “next key contest” for Ukraine.
Russia says the West risks ‘wrath’ of God if it punishes Moscow over war
Dr Ashish Jha has a theory about why, after 2 years & counting, the Covid-19 pandemic still isn't over. According to Jha, the White House's Covid response coordinator, scientists & public health officials have mostly nailed the medical response to the pandemic: As experts have learned more about the coronavirus, the US has continually adapted its safety guidelines & treatment plans accordingly. The problem, Jha said is that those experts often fail to communicate effectively about those shifts — leading many Americans to mistrust the science & turn to social media for health information over publicly appointed doctors and scientists. “We got the biological science right, but we didn’t get the social science right,” Jha added. The medical response to Covid has indeed been impressive: In record time, scientists created multiple highly safe Covid vaccines that are especially effective at preventing severe illness, hospitalization & death. New booster shots targeting specific Covid strains — for even stronger protection — are on the path toward federal approval, too. For those who fall particularly ill from a Covid infection, multiple therapeutic drugs are currently on the market, with more in the development pipeline. Jha directly attributed these advancements to stellar communication within the scientific community. “The sheer amount of collaboration that happened in the scientific community was unprecedented,” Jha said, adding: “That was a major reason we got vaccines and treatments, and all of that was scientists trusting each other to use [each other’s] information wisely.” But frequent changes to the nation's safety guidelines, particularly early in the pandemic, torpedoed many people's faith in official messaging around Covid — causing them to interpret a large swath of information from public health experts as inaccurate. That mistrust may be keeping some people from getting vaccinated even today & the country's lagging vaccination rate is a significant reason the virus is still circulating.
Why Covid is still a pandemic, says Dr. Ashish Jha: ‘We didn’t get the social science right’
Oil futures settled higher,
marking a partial rebound from 2 consecutive sessions of declines,
with US prices climbing back above $100 a barrel. The climb in oil
came on the back of a nearly 6% rise in gasoline futures. The Energy Information Administration data
showed a healthy rebound in gasoline demand, easing some recent
concerns about demand destruction in gasoline markets. Natural-gas futures,
meanwhile, rallied after the EIA reported a smaller-than-expected weekly rise
in US supplies. West Texas Intermediate crude for Aug
rose $4.20 (4.3%) to settle at $102.73 a barrel. Aug gasoline settled at $3.4204 a gallon, up
18¢ (5.7%). Aug natural gas added 79¢ (14.3%) to
end at $6.297 per M British thermal units.
U.S. oil prices settle back above $100 a barrel; natural-gas futures rise over 14%
Gold prices finished
higher, snapping a 7-day losing streak — the longest
string of losses for the yellow metal in more than 3 years. Gold futures for Aug added $3 to settle
at $1739 an ounce. Yesterday, gold finished at its lowest
settlement level since last Sep. The $ steadied today, helping to ease the downward
pressure on gold & industrial commodities. The ICE US Dollar index
a measure of the $'s strength against a basket of its rivals, was
little changed at 107.12. The positive settlement in gold futures today marked the first in 8 trading sessions. Yesterday, the precious metal logged its 7th straight decline, the longest streak of losses since the 7-session drop ended Mar 2019.
Gold ends higher after longest losing streak in more than 3 years
St Louis Federal Reserve Pres James Bullard said he didn't see a US recession on the horizon. “We’ve got a good chance of a soft landing here going forward,” Bullard said during a talk today. Bullard added the economy is slowing but more to a 2% trend rate of growth after the strong 5.7% growth rate in 2021. Bullard noted that gross domestic income – an alternate measure to the commonly-use GDP measure – was positive in Q1, even though GDP was down 1.6% annual rate. “Wall Street is talking a lot about recession – they’re talking about two quarters of negative GDP growth. I’m not really getting that from anecdotal information like this,” Bullard added. He said the labor market is very strong and it could cool down & still be better-than-average. In a subsequent roundtable, Bullard said a 0.75% increase in the Fed’s benchmark interest rate at the FOMC Jul 26-27 meeting “would make a lot of sense.” “I think this has been priced into the markets already,” Bullard added. The St Louis Fed pres, who is a voting member of the FOMC this year, said he continues to support moving the benchmark rate up to 3.5% by the end of the year. After being close to zero until Mar, the Fed has already hiked its benchmark Fed funds rate to 1.5-1.75%. Bullard said his preferred 3.5% Fed funds rate would be the “minimal” level for rates in this high inflation economy.
Fed's Bullard says there is a 'good chance' of a soft
Bullard's comments brought out buyers today. However tomorrow the report on jobs created & the new unemployment rate will get everybody's attention. The REIT index above was only flattish today because REITs will feel the effect of higher interest rates.
Dow Jones Industrials
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