Dow rose 284, advancers over decliners almost 8-1 & NAZ gained went up 189. The MLP index gained 3 to go over 220 & the REIT index was up 3+ to the 424s. Junk bond funds edged higher & Treasuries saw limited buying (more below). Oil recovered 2+ to the 85s & gold added 4 to 1725 (still in the dumps).
AMJ (Alerian MLP index tracking fund)
US mortgage rates climbed to their highest level in 14 years this week as the housing market prepares for the Federal Reserve to implement further interest rate hikes to combat sky-high inflation. Freddie Mac said that its latest Primary Mortgage Market Survey shows the average rate for the benchmark 30-year fixed mortgage rose again this week to 5.89%, up from last week's reading of 5.66%. At this time last year, 30-year fixed-rate products averaged 2.88%. The rate for a 15-year fixed note also surged, averaging 5.16% after coming in at 4.98% last week. That is more than double the average rate at this time last year when 15-year products were at 2.19%. "Mortgage rates rose again as markets continue to manage the prospect of more aggressive monetary policy due to elevated inflation," said Sam Khater, Freddie Mac's chief economist. "Not only are mortgage rates rising but the dispersion of rates has increased, suggesting that borrowers can meaningfully benefit from shopping around for a better rate."
NEW 'REALTY': Mortgage rates reach highest level in over a decade
Yields on Treasury bonds were little changed after moving upward in the previous session following the ECB's interest rate hike deployed to tackle soaring inflation in the bloc. The yield on the benchmark 10-year Treasury note was 2 basis points higher at 3.323%, while the yield on the 30-year Treasury bond was 5 basis points higher at 3.489%. The yield on the 2-year note was trading at 3.519%. The short-term note rose to 3.55% last week, reaching its highest level since 2007. Yields move inversely to prices & a basis point is equal to 0.01%. Yields had ticked upward after the ECB yesterday hiked interest rates by 75 basis points, raising its deposit rate to 0.75% from zero, in a largely expected hawkish move to counter fast-rising inflation. Investors remain wary of a slowing economy & the Fed's next moves on rate hikes, as policymakers imply further aggressive moves will likely be needed to temper rising costs. Still, recent Fed data has shown that while inflation is still climbing, the pace of its rise is slowing. Federal Reserve Vice Chair Lael Brainard yesterday vowed to continue the fight against inflation “for as long as it takes.” “So far, we have expeditiously raised the policy rate to the peak of the previous cycle, and the policy rate will need to rise further,” she said. She added that policymakers will rely on data to ensure they don’t overreact on tightening measures.
U.S. Treasury yields little changed following ECB's aggressive rate hike
EU energy ministers today gathered in Brussels for emergency talks on how to protect households & businesses from runaway gas & electricity prices ahead of winter. European Commission Pres Ursula von der Leyen sought to lay the groundwork for today;s meeting with a 5-point plan. This includes a price cap on Russian gas, a windfall tax on fossil fuel profits, a mandatory target for reducing electricity use & emergency credit lines for power companies. Russian Pres Vladimir Putin responded to the proposals by threatening to rip up existing supply contracts if a cap on Russian energy exports is imposed, warning that he was prepared to let Europe “freeze” during the colder months. A Russian Foreign Ministry spokeswoman today reportedly warned that the West failed to understand how energy price caps could impact their own countries. “The collective West does not understand: the introduction of a cap on prices for Russian energy resources will lead to a slippery floor under its own feet,” she said. It is not expected that EU member states will reach a decision today regarding the proposed policy ideas.
Russia has warned against capping energy prices, but Europe is ploughing ahead
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