Dow lost 58, decliners over advancers 2-1 & NAZ fell 150. The MLP index added 1+ to the 206s & the REIT index went up 2+ to the 438s. Junk bond funds drifted lower & Treasuries continued to see s little selling. Oil was off pennies but still above 90 & gold went up 5 to 1810 (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)
The national inventory of homes for sale grew at a record pace for a 3rd consecutive month in Jul, the latest sign that rising borrowing costs are starting to cool off the housing market. The number of active listings in the US soared 30.7% from the previous year, according to the latest Monthly Housing Trends report. Although potential buyers had more housing options in Jul, competition remained largely in sellers' favor, with listing prices hovering near all-time highs & homes selling more quickly than before the COVID-19 pandemic. "The U.S. housing market continues to move toward more evenly balanced supply and demand compared to the 2021 frenzy," said Danielle Hale, the chief economist at Realtor.com. "Our July data shows elevated mortgage rates left many buyers tightening their budgets and sellers responding with price reductions, while home shoppers who kept searching saw more available options." The interest rate-sensitive housing market has started to cool noticeably in recent months as the Federal Reserve moves to tighten policy at the fastest pace in 3 decades in order to cool consumer demand & bring scorching-hot inflation under control. Policymakers approved back-to-back 75 basis point rate hikes in Jun & Jul & have indicated that another increase of that magnitude is possible in Sep, hinging on upcoming economic data. Following the rate hikes, the average rate on a 30-year fixed mortgage – the most popular among new homeowners – climbed to nearly 6% in Jun, though they've since moderated. The average rate for a 30-year fixed mortgage hovered around 4.99% for Aug 4, according to recent data from mortgage lender Freddie Mac. That is significantly higher than just one year ago, when rates stood at 2.77%. Sellers have responded to the slowdown in purchases by cutting prices, although they remain near all-time highs. The nationwide median list price was $449K in Jul, up about 17% from the same period one year ago. "With inventories increasing, buyers will have more negotiating power," Hale said. "The two years of a market heavily tipped in favor of sellers appears to be in the rear view mirror."
Home listings surge at record rate as market starts to cool
US worker productivity in Q2 fell at its steepest pace on an annual basis since 1948,
the Labor Dept said, while growth in unit labor costs
accelerated, suggesting strong wage pressures will continue to help keep
inflation elevated. Nonfarm
productivity, which measures hourly output per worker, fell at 2.5%
pace from a year ago. It also declined sharply in Q2 at a
4.6% annualized rate, after having declined by an upwardly revised 7.4%
in Q1. The forecast expected productivity would decline at a 4.7% rate in Q2. Large
shifts in the composition of the US workforce in the wake of the
COVID-19 pandemic have made it harder to measure underlying productivity
growth, which some economists put at about 1.0% or less, making the Federal Reserve's fight against inflation more difficult. Hours worked increased at a 2.6% rate in Q2. Unit labor costs
- the price of labor per single unit of output - rose at a 10.8% rate. That followed a 12.7% rate of growth in Q1. Unit labor costs increased at a 9.5% rate from a year ago. An acute
shortage of workers is boosting wage growth. There were 10.7M job openings at the end of Jun. Hourly compensation rose at a 5.7% rate in Q2 & at a 6.7% rate compared to Q2 of 2021.
US productivity posts biggest ever annual drop in second quarter
Russia announced it is suspending crude oil exports thru its Druzhba pipeline, leading to price increases. The move cuts off the flow of oil to Hungary, Slovakia & the Czech Republic. Russian pipeline operator Transneft blamed the situation on its counterpart in Ukraine, saying that the Ukrainian company stopped the oil transport because of a problem with Russia's ability to pay. An insider reported that Russia's failure to pay was a result of Western sanctions & that a Transneft spokesperson said the pipeline's northern section will continue to function normally. That section of the pipeline provides oil to Poland & Germany via Belarus. Soon after the announcement that the Ukrainian part of the pipeline would be halted, crude oil prices jumped, with Brent crude increasing 1.4% to nearly $98 a barrel. WTI crude went up 1.2%, reaching almost $92 a barrel. The situation arose just 2 over weeks after Russian state-owned energy company Gazprom cut natural gas flow to Germany, reducing supplies through the Nord Stream 1 pipeline to just 20%. The pipeline had reopened at 40% capacity a week earlier after being down for 10 days for scheduled maintenance . Gazprom blamed that situation on sanctions that held up the return of a turbine that had been sent to Canada for repairs in Jun. Europe is heavily reliant on Russian energy, importing about 40% of its gas & 30% of its oil from Russia. Meanwhile, Ukraine is looking to increase its energy exports to Europe. In Jul the country began supplying Slovakia, & Hungary & Moldova are expected to follow.
Crude oil prices rise as Russia suspends exports to Europe through pipeline
Gold futures closed at their highest level in 6 weeks, as stocks & the $ slumped ahead of tomorrow's US consumer-price index update for Jul, which could help inform the Federal Reserve's next steps in its inflation fight. Gold futures expiring in Dec rose $7 to end at $1812, the highest level for the most-active contract since Jun 29. Following months of weakness, the yellow metal has held up remarkably well since Fri's surprisingly strong US employment report, which showed the US economy had added more than 500K jobs in the month of Jul nearly doubling expectations. The number of people working finally returned to Feb 2020 levels — the last month before the pandemic descended on the US & the rest of the world. The red-hot jobs report put even more emphasis than usual on tomorrow's consumer-price index update for Jul, which could help inform the Federal Reserve’s next steps in its fight against inflation that was last pegged at a 4-decade high. The CPI reading is expected to show a slight retreat from the 9.1% annual pace recorded in Jun, in part due to the recent pullback in gasoline prices at the pump. Treasury yields were edging higher today, while the $ was down 0.2% & Fed funds futures were pricing in a high likelihood of a 75 basis point interest rate hike at the Federal Reserve's Sep meeting. Gold has rebounded sharply over the past month, recouping all but 3% of its losses since the start of 2022, when looking at the most-active contact.
Gold ends at six-week high, topping $1,812 as investors await inflation report
Oil futures ended slightly lower after flipping between gains & losses
after Russia halted oil flows along the southern portion of the Druzhba
pipeline to Hungary, the Czech Republic & Slovakia. News reports said
the move came after sanctions prevented the payment of a transfer fee. Crude was lifted after the pipeline halt was reported, but saw renewed
pressure tied to uncertainty over the outlook for crude demand. West
Texas Intermediate crude for Sep fell 26¢
to end at $90.50 a barrel.
Oil ends slightly lower in choppy session as Russia cuts pipeline flows
There was not a lot to do for traders today & the Dow was in the red for the entire session, During the next 2 days their attention will be on inflation data. Tomorrow the consumer price index will give price increases in recent weeks. Since West Texas Intermediate oil (gas at the pump in the US) is off about 20% from its recent peek, tomorrow's overall increase should be lower than in the prior month. However, the increase is still expected to be significant. Thurs is the producer price index which shows price increases for the coming weeks. That represents the future for inflation.
Dow Jones Industrials
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