Dow went up 43, advancers over decliners 2-1 & NAZ gained 63. The MLP index rose 1+ to the 225s & the REIT index bounced back 3+ to 431. Junk bond funds fluctuated & Treasuries climbed higher, with the yield above 3% on the 10 year Treasury (more below). Oil was flattish in the 93s & gold inched up 1 to 1763.
AMJ (Alerian MLP index tracking fund)
Pending home sales, a measure of signed contracts on existing homes, slipped 1% from Jun to Jul, according to the National Association of Realtors (NAR). Compared to a year ago, sales were down 19.9%. The figure, a future indicator of closed sales, has fallen for 8 of the past 9 months as rising mortgage rates made housing less affordable. Higher rates pushed the typical mortgage payment up by 54% from a year ago, according to the NAR. The drop in sales was smaller than previous months & could be a sign of the market settling, even if for a brief period. “We may be at or close to the bottom in contract signings,” said Lawrence Yun, chief economist for the realtors association. “This month’s very modest decline reflects the recent retreat in mortgage rates. Inventories are growing for homes in the upper price ranges, but limited supply at lower price points is hindering transaction activity.” Mortgage rates have been climbing steadily this year, peaking in Jun before dropping slightly in Jul. Rates resumed their rise this week & are now approaching 6% again, according to Mortgage News Daily.
Treasury yields were slightly higher, as investors awaited a fresh batch of economic data & Treasury auctions. The yield on the benchmark 10-year Treasury note rose 2 basis points to 3.078% & the 10-year yield climbed above 3% for the first time in a month earlier in the week. The yield on the 30-year Treasury bond gained 2 basis points to 3.275%, while the yield on the short-term 2-year Treasury note was 1 basis point higher, trading at about 3.32%. Yields move inversely to prices & a basis point is equal to 0.01%. It comes as market participants prepare for a much anticipated speech from Federal Reserve Chair Jerome Powell on Fri addressing the central bank's tightening path. Yesterday, Minneapolis Fed Pres Neel Kashkari reiterated the central bank's commitment to bringing inflation under control thru monetary policy tightening & said his biggest fear is that the persistence of price pressures is underestimated.U.S. Treasury yields tick higher as investors await economic data, look ahead to Fed conference
The overwhelming majority of economists expects the economy to tumble into a recession next year as a result of the Federal Reserve's war on inflation, according to a new survey. Findings from the National Association of Business Economics (NABE) shows that 72% of economists expect an economic downturn by the middle of next year — or think the economy is already in one. About 20% of respondents said they believe the economy is already in a recession. Another 20% do not expect a downturn to start before H2-2023. "Survey results reflect many split opinions among the panelists," NABE Pres David Altig said. "This by itself suggests there is less clarity than usual about the outlook." The survey, conducted Aug 1-9, polled 198 members of the NABE. There is a growing consensus that the Federal Reserve will trigger a recession as it battles inflation with a series of aggressive interest rate hikes. Policymakers approved the second consecutive 75-basis-point rate hike in Jul & have indicated that another supersized rate hike is on the table in Sep, depending on forthcoming economic data. Gross domestic product (GDP), the broadest measure of goods & services produced in the country, already fell for 2 straight qtrs, with the economy shrinking by 1.6% in Q1 & falling by another 0.9% in Q2.
Economists give grim warning of where US economy is headed
Before Powell speaks on Fri, there is not much going on in the stock market. But the inverted yield curve remains & now (see above) many economists see a recession coming next year. Traders are twiddling their thumbs today.
Dow Jones Industrials
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