Dow pulled back 346, decliners over advancers better than 2-1 & NAZ declined 75. The MLP index fell 1+ to 211 & the REIT index sank 10+ to the 353s on higher interest worries. Junk bond funds fluctuated & Treasuries were sold bringing higher yields. Oil was fractionally higher to the 88s & gold did not budge from 1720 (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 Biden administration is nearing a decision on the future of federal offshore fossil fuel drilling & hasn't ruled out a complete block on new leases. Today the 90-day comment period for the Dept of the Interior's (DOI) proposed 5-year offshore leasing plan ended, paving the way for the agency to issue a final decision. In Jul, the DOI unveiled the plan which gutted a Trump administration proposal, ruling out any leasing in the Atlantic or Pacific & opening the door to an unprecedented scenario where no lease sales would be held thru 2028. "The ability of U.S. producers to provide more oil and natural gas supplies to the world market has also changed geopolitical dynamics for the better, resulting in greater energy security for the U.S. and its allies, in addition to global environmental benefits," Cole Ramsey, the VP of upstream policy at the American Petroleum Institute (API), said. "Given the current global circumstances, rarely has a strong offshore leasing program been more essential to our energy security." The API submitted comments earlier in the day, urging the administration to open federal waters up for "safe and environmentally responsible" drilling. In the comments, the group expressed concern with the DOI's zero-lease scenario, saying it would jeopardize domestic energy production & weaken energy security. "Every previous administration, whether Republican or Democrat, has recognized the strategic advantages of U.S. offshore domestic energy and fulfilled their statutory obligation to maintain an offshore leasing program and continuously hold lease sales," Frank Macchiarola — API's senior VP of policy, economics & regulatory affairs — said on a call. "Yet, the Biden administration has failed to address current and future U.S. energy needs." "Announcing a program with zero new lease sales would be the exact wrong policy at the wrong time," he added. Officials from the Louisiana Mid-Continent Oil & Gas Association, US Chamber of Commerce Global Energy Institute & the Consumer Energy Alliance were also present on the call. Under the DOI's proposal, the federal gov could choose to hold anywhere between 0-11 offshore lease sales, compared to the Trump administration's version which called for 47 such sales. Federal law mandates the interior secretary to issue offshore leasing plans every 5 years laying out prospective oil & gas lease sales. However, the administration dragged its feet on a replacement plan as it considered objections from environmental groups, which oppose all new fossil fuel leasing, & pressure from industry as gas prices surged. In her statement announcing the proposal on Jul 1, Interior Secretary Deb Haaland reaffirmed her & Pres Biden's "commitment to transition to a clean energy economy."
Biden weighs complete block on offshore drilling as gas prices soar
The 30-year fixed-rate mortgage averaged 6.66% with an average 0.8 point as of today, down from last week when it averaged 6.70%, according to Freddie Mac. A year ago at this time, the 30-year FRM averaged 2.99%. The 15-year fixed-rate mortgage averaged 5.90% with an average 1.0 point, down from last week when it averaged 5.96%. A year ago at this time, the 15-year FRM averaged 2.23%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 5.36% with an average 0.3 point, up from last week when it averaged 5.30%. A year ago at this time, the 5-year ARM averaged 2.52%. "Mortgage rates decreased slightly this week due to ongoing economic uncertainty," said Sam Khater, Freddie Mac's Chief Economist. "However, rates remain quite high compared to just one year ago, meaning housing continues to be more expensive for potential homebuyers." Rapidly rising mortgage rates have more than doubled this year, pushing many prospective homebuyers out of the market. Freddie Mac says that for a typical mortgage, borrowers who locked in at the higher end of the rate range during the past year would pay several hundred $s more than borrowers who signed contracts at the lower end of the range.
COOLING DOWN: Mortgage rates decrease slightly after six weeks of rising
Q3 of every year is historically the busiest for apartment rentals, but demand fell this year, according to RealPage. It's the first time the rental technology platform has recorded a Q3 drop in the 30 years it's been tracking the metric. Demand fell by more than 82K units nationally. This came after a record number of new renters filled apartments during the first 2 years of the Covid pandemic. Now, household formation appears to have stalled, with more renters now moving out than moving in. Apartment vacancies popped 1 percentage point to 4.1%, still very low due to that previous demand surge. “Soft leasing numbers coupled with weak home sales point to low consumer confidence,” said Jay Parsons, head of economics & industry principals at RealPage. “Inflation and economic uncertainty are having a freezing effect on major housing decisions. When people are uncertain, human nature is to go into ‘wait and see’ mode.” As a result of the slowdown in demand, asking rents, which had already been growing at a slower pace at the start of this year compared with last year, dropped in Sep for the first time since Dec 2020, down 0.2%. Higher rents in general may be turning some potential tenants away, but the slowdown appears to be across all price points.
Apartment demand unexpectedly fell during its busiest season, new report says
Gold futures ended unchanged, with investors expecting the metal to take its next directional cue from the monthly US jobs data due tomorrow. Prices for the yellow metal held onto a climb for the week after recently climbing to their highest level in 3 weeks. Gold futures for Dec settled flat at $1720 per ounce, after trading between a low of $1714 & high of $1734. Prices for the most-active contract fell yesterday, but settled Tues at $1730, the highest since Sep 12. Gold had been paring its gains from earlier in the week due to a rebound in Treasury yields & the $. The 10-year Treasury climbed 4 basis point to 3.801%, while the ICE US Dollar Index rose 0.9% to 112.04 today. Investors will receive an update on the strength of the US labor market tomorrow when nonfarm payrolls data for Sep are released. Everyone will be closely watching tomorrow's Sep nonfarm payrolls & its impact on the Nov Federal Reserve meeting. Investors will be interested to see an increase in unemployment in the US which may result in a slower pace of interest-rate hikes. Today, the number of people who applied for unemployment benefits last week jumped by 29K to a 5-week high of 219K, possibly a sign of rising layoffs as the US economy slows. The Federal Reserve has been lifting interest rates to try to tame inflation, which contributed to a rise in the $ — pressuring $-denominated gold prices. Bond yields, the direction of US stock futures & the US $ index will continue to impact bullion prices until the release of the Sep consumer price index on Oct 12.
Gold futures end flat as investors look to U.S. jobs report for the metal’s next move
Oil futures finished higher for a 4th session in a row,
continuing to find support a day after the Organization of the Petroleum
Exporting Countries & their allies announced a 2M-barrel
production cut starting in Nov.
US benchmark West Texas Intermediate crude for Nov rose
69¢ (0.8%) to settle at $88.45 barrel. That was the highest front-month finish since Sep 14.
U.S. oil futures finish higher for a 4th session in a row
Dow Jones Industrials
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