Dow dropped 107, decliners over advancers 4-1 & NAZ slid back 153. The MLP index was off 3+ to the 211s & the REIT index dropped 3+ to the 381s. Junk bond funds were heavily sold & Treasuries saw very heavy selling, taking the yield on the 10 year Treasury yield up a staggering 19 basis points to 3.7%. Oil rose in the 83s & gold went up 4 to 1679 (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)
Mortgage rates moved higher again this week, with the 30-year fixed-rate averaging 6.29%, up from 6.02% last week, Freddie Mac said. A year ago at this time, the 30-year FRM averaged 2.88%. That's the highest since 2007, a year before a crash in the housing market triggered the last recession. The 15-year fixed-rate mortgage averaged 5.44%. Last week they averaged 5.21%. A year ago at this time, the 15-year FRM was 2.15%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.97%. Last week the average was 4.93%. A year ago at this time, the 5-year ARM was 2.43%. "The housing market continues to face headwinds as mortgage rates increase again this week, following the 10-year Treasury yield’s jump to its highest level since 2011," said Sam Khater, Freddie Mac's Chief Economist. Sam continued that "impacted by higher rates, house prices are softening, and home sales have decreased. However, the number of homes for sale remains well below normal levels." Rapidly rising mortgage rates threaten to sideline even more homebuyers after more than doubling in 2022. Last year, prospective homebuyers were looking at rates well below 3%. Perhaps nowhere else is the effect of the Fed's action more apparent than the housing sector. Existing home sales have been in decline for seven straight months as the rising cost to borrow money puts homes out of reach for more people. The National Association of Realtors said yesterday that existing home sales fell 0.4% last month from Jul to a seasonally adjusted annual rate of 4.8M.
Mortgage rates reach highest since 2007 – a year before the housing market crash
Ford (F) announced plans to restructure its global supply chain, days after the company said it expects to book an extra $1B in unexpected supplier costs during Q3. The
supply chain restructuring aims to “support efficient and reliable
sourcing of components, internal development of key technologies and
capabilities, and world-class cost and quality execution,” the automaker said. The
effort will be led on an interim basis by Ford CFO
John Lawler until the company selects someone to fill the newly created
chief supply chain officer position. Lawler is stepping in at a time when parts & raw material costs for automakers & suppliers have been soaring during the coronavirus pandemic. The increases have occurred amid severe supply chain problems,
including an ongoing global shortage of crucial semiconductor chips. On
Mon, Ford said recent negotiations resulted in inflation-related
supplier costs running $1B higher than previously expected during Q3. The
restructuring is not directly connected to the automaker's recent announcement
earlier this week. A spokesman said
changes to Ford’s supply chain have been underway for some time amid the
industry’s supply chain problems and its shift to electric vehicles. “As we’ve acknowledged before, this is an area we’ve gotten better, and there’s still additional room for improvement,” he added. The stock fell 28¢.
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club.ino.com/trend/analysis/stock/F?a_aid=CD3289&a_bid=6ae5b6f7
Ford to restructure supply chain after $1 billion in unexpected Q3 costs
Britain's central bank raised its key interest rate by another ½-percentage point to the highest level in 14 years, but it avoided more aggressive steps to tame inflation taken by the US Federal Reserve & other banks around the world. It is the Bank of England's 7th straight move to increase borrowing costs as rising food & energy prices fuel a cost-of-living crisis that is considered the worst in a generation. Despite facing a slumping currency, tight labor market & inflation near its highest level in 4 decades, officials held off on acting more boldly as they predicted a 2nd consecutive drop in economic output this qtr, an informal definition of recession. The bank matched its ½-point increase last month — the biggest in 27 years — to bring its benchmark rate to 2.25%. The decision was delayed for a week as the UK mourned Queen Elizabeth II & comes after new Prime Minister Liz Truss' gov unveiled a massive relief package aimed at helping consumers & businesses cope with skyrocketing energy bills. The new measures have eased uncertainty over energy costs & are "likely to limit significantly further increases" in consumer prices, the bank's policymakers said. They expected inflation to peak at 11% in Oct, lower than previously forecast. "Nevertheless, energy bills will still go up and, combined with the indirect effects of higher energy costs, inflation is expected to remain above 10% over the following few months, before starting to fall back," the monetary policy committee said. The bank signaled it is prepared to respond more forcefully at its Nov meeting if needed. Its decision comes during a busy week for central bank action marked by much more aggressive moves to bring down soaring consumer prices.
Bank of England hikes rates but avoids more aggressive step
Oil futures climbed to recoup much of the losses seen a day earlier, as Russia's decision to partially mobilize reservists amid its war on Ukraine raised worries about global oil supplies. Crude prices remain volatile as energy traders grapple with a deteriorating demand outlook that is still vulnerable to shortages. Nov WTI crude edged up by 55¢ (0.7%) to settle at $83.49 barrel.
Oil futures end higher as Russia bolsters its war efforts, lifting supply worries
Gold futures climbed, with the precious metal settling higher for a 2nd straight session as Russia ratchets up its war effort in Ukraine. Strength in the $ in the wake of the Federal Reserve's 3rd 75 basis-point interest-rate hike, however, capped gold's rise. Gold for Dec rose $5 to settle at $1681 per ounce following a gain of 0.3% yesterday. Geopolitical tensions resulting from the Ukraine war provided support to haven gold today, as Russian Pres Vladimir Putin called up reservists & ratcheted up his nuclear rhetoric. Strength in the $, however, with the ICE US Dollar Index, a gauge of the $'s strength against a basket of rivals, at its strongest level in more than 20 years, limited the gains for gold. The index was up 0.5% to 111.21 today. News from Russia of a partial mobilization & a move to a war stance in Ukraine from a special military operation supported gold prices yesterday. Fears, uncertainties & an escalation of events in Ukraine will underpin gold trading. In Treasury trading today, the 2-year yield has now climbed solidly north of 4%, seen as a level that could unleash stress across markets. The yield has reached its highest level since late 2007.
Gold futures up a second session as tensions rise in the Russia-Ukraine war
Dow is struggling to hold above the key 30K support level after dipping below today. But the chart below is not encouraging. Interest rates keep rising which means the bulls have a tough time making their case with rising interest rates & a serious recession on the minds of just about everybody. Meanwhile oil (WTI), at below $85, is near its lows in for 2022. Before the oil crash in 2020, the 80s was the upper end of its roughly 50-80+ long term trading range. Overall times are tough for stock investors & there are no quick fixes.Dow Jones Industrials
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