Dow finished down 90 (500 below early highs), decliners over advancers more than 5-2 & NAZ retreated 65. The MLP index stayed near 2167 & the REIT index slid 1+ to the 346s Junk bond funds drifted lower & Treasuries saw heavy selling, taking the yield on the 10 year Treasury to 4.21%. Oil did little in the 85s & gold was even at 1633 (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 30-year fixed-rate mortgage averaged 6.94% with an average 0.9 point as of today, up from 6.92% a week ago, according to gov-sponsored home mortgage packager Freddie Mac. A year ago at this time, the 30-year rate averaged 3.09%. The 15-year fixed-rate mortgage averaged 6.23% with an average 1.1 point, up from last week when it averaged 6.09%. A year ago at this time, the 15-year FRM averaged 2.33%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.71% with an average 0.4 point, down from last week when it averaged 5.81%. A year ago at this time, the 5-year ARM averaged 2.54%. "Mortgage rates slowed their upward trajectory this week," said Sam Khater, Freddie Mac's Chief Economist. "The 30-year fixed-rate mortgage continues to remain just shy of seven percent and is adversely impacting the housing market in the form of declining demand." "Additionally, homebuilder confidence has dropped to half what it was just six months ago and construction, particularly single-family residential construction, continues to slow down." The report comes as sales of previously occupied US homes fell in Sep for the 8th month in a row, matching the pre-pandemic sales pace from 10 years ago, as house hunters faced sharply higher mortgage rates, higher home prices & a still tight supply of properties on the market. The National Association of Realtors said today that existing home sales fell 1.5% last month from Aug to a seasonally adjusted annual rate of 4.71 million. That's slightly higher than what economists were expecting. The housing market has been slowing as average long-term mortgage rates have doubled from a year ago, making homes less affordable.
Housing market takes hit as mortgage rates edge higher
Philadelphia Federal Reserve Pres Patrick Harker said higher interest rates have done little to keep inflation in check, so more increases will be needed. “We are going to keep raising rates for a while,” the central bank official said in remarks for a speech in New Jersey. “Given our frankly disappointing lack of progress on curtailing inflation, I expect we will be well above 4% by the end of the year.” The latter comment was in reference to the fed funds rate, which currently is targeted in a range of 3-3.75%. Markets widely expect the Fed to approve a 4th consecutive 0.75 percentage point interest rate hike in early Nov, followed by another in Dec. The expectation is that the FOMC, of which Harker is a nonvoting member this year, will then take rates a bit higher in 2023 before settling around 4.5%-4.75%. Harker indicated that those higher rates are likely to stay in place for an extended period. “Sometime next year, we are going to stop hiking rates. At that point, I think we should hold at a restrictive rate for a while to let monetary policy do its work,” he said. “It will take a while for the higher cost of capital to work its way through the economy. After that, if we have to, we can tighten further, based on the data.” Inflation is currently running around its highest level in more than 40 years. According to the Fed's preferred gauge, headline personal consumption expenditures inflation is running at a 6.2% annual rate, while the core, excluding food & energy prices, is at 4.9%, both well above the central bank’s 2% target. “Inflation will come down, but it will take some time to get to our target,” Harker added.
Fed’s Harker sees ‘lack of progress’ on inflation, expects aggressive hikes
After Pres Biden announced an additional 15M barrels of oil from the Strategic Petroleum Reserve (SPR) would be released to combat rising gas prices just weeks before the midterm elections, one American oil industry leader is now calling it the "strategic political reserve" that put us in a "very precarious position." "This is a very precarious position we're in today at a ti me of dramatic geopolitical upheaval," American Petroleum Institute pres CEO Mike Sommers said. "We need to have that SPR in place and at the right levels dealing with the current geopolitical situation we're in today." Sommers warned the US could be headed towards record-high gas prices in the coming months, while also cautioning that not implementing the right policy will prevent a return to American energy leadership. Addressing matters, Biden explained that the administration would be releasing an additional 15M barrels from the US reserves. He went on to say that he would refill the SPR when prices fell below $70 per barrel. After being asked to respond to Rep accusations that the release of the oil reserves was done for political advantage, Biden quickly dismissed the notion. "It's not politically motivated at all," Biden said. "It's motivated to make sure that I continue to push on what I've been pushing on, and that is making sure there's enough oil that's being pumped by the companies so that we have the ability to be able to produce enough gas that we need here at home, oil we need here at home and at the same time keep moving in a direction of providing for alternative energy." Sommers argued Pres Biden has tried to do "everything" to halt domestic oil production "from the very beginning" of this administration. "We're currently at a point where we have less federal leasing from this administration than we've had in any administration since World War II," Sommers said. "We're at record-level lows. At this point in the Obama administration, they'd done 60 leases in the offshore. So far, [Biden's] only done six." "This administration continues to talk out of both sides of its mouth, saying they want more production but not putting more policies in place that would actually encourage more production," the oil industry CEO continued. "This administration continues to talk out of both sides of its mouth, saying they want more production but not putting more policies in place that would actually encourage more production," the CEO continued. Oil producers want to see legislation that provides incentives for pumping more while sending a message that oil is a long-term strategic asset for the US, Sommers noted, claiming Biden's current energy policy does the opposite.
Biden's latest decision on oil just put the US in a ‘very precarious position,' CEO warns
Gold prices ended higher as prices for the precious metals continued to seesaw this week alongside the $ & Treasury yields. Gold futures for Dec crawled up $2 to settle at $1636 per ounce after losing 1.3% yesterday. Prices of the most-active gold contract rose as some precious-metals traders bet that expectations for further Federal Reserve interest-rate hikes may have finally peaked. The Dec meeting has about 50% odds of another jumbo hike. The traders are now starting to look at signs that peak central-bank hawkishness is now behind us. The ICE US Dollar Index, a gauge of the $'s strength against a basket of rivals, was down 0.1% at 112.842. Yesterday, St Louis Fed Pres James Bullard, a key voice on the Fed’s policy-setting committee, sent a dovish signal to the market by saying that he believes the central bank can conquer inflation in the US without cracking the labor market.
Gold, silver end higher as traders see chance of less aggressive Fed rate rises
Oil futures ended on a mixed note, with the Nov US benchmark contract ending higher on its expiration day, but the Dec contract little changed. Oil found some support from reports that China is looking to cut the duration of quarantine for inbound visitors, in a sign that perhaps the gov might be looking to try & mitigate some of the worst effects of its zero-COVID policy. The reality is it's unlikely to make much difference given that as the weather gets colder, COVID infection rates are only likely to increase, making this tinkering pretty much irrelevant. US benchmark West Texas Intermediate crude for Nov rose 43¢ (0.5%) to settle at $85.98 a barrel. The Dec WTI contract, the new front-month contract as of the close, settled at $84.51, down by a penny for the session.
Oil prices end mixed on reports that China may ease COVID restrictions
Dow Jones Industrials
No comments:
Post a Comment