Dow went up 176, decliners over advancers about 2-1 & NAZ crawled up 21. The MLP index gained 4+ to the 415s & the REIT index added 3 to the 372s. Junk bond funds were mixed & Treasuries had significant selling, bringing higher yields. Oil rose 2+ to the 79s & gold went up 9 to 1804 (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)
Sales of new US homes rose for a 2nd straight month in Nov as buyers took advantage of mortgage rates that eased slightly from a previous high. New single-family home purchases rose 5.8% to a seasonally adjusted annual rate of 640K units, the Commerce Dept reported. The forecast expected new home sales – which account for a small percentage of total sales – to fall 4.7% last month. On an annual basis, new home sales are still down 15.3%. The median new house price climbed nearly 9.5% in Nov from the year-ago period to $471K. However, that is down about 4.5% from Oct. There were about 461K new homes on the market at the end of Nov, the report shows, a slight decrease from the previous month. The interest rate-sensitive housing market has borne the brunt of the Federal Reserve's aggressive campaign to tighten monetary policy & slow the economy. Policymakers already lifted the benchmark federal funds rate seven consecutive times & have indicated they plan to continue raising rates higher in 2023 as they try to crush inflation that is still abnormally high. The average rate for a 30-year fixed mortgage fell to 6.27% this week, according to Freddie Mac. While that is significantly higher than just one year ago when rates stood at 3.05%, it is down from a peak of 7.08% notched in Nov. Combined with high home prices, the rapid rise in borrowing costs has pushed many entry-level homebuyers out of the market. On an annual basis, home sales plunged 35.4% in Nov. "In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the COVID-19 economic lockdowns in 2020," said Lawrence Yun, the chief economist at NAR. "The principal factor was the rapid increase in mortgage rates, which hurt housing affordability and reduced incentives for homeowners to list their homes."
US new home sales unexpectedly increase for second straight month
Confidence among US consumers improved in Dec, recovering the losses registered in Nov, as concerns over inflation & the state of the economy eased at year-end. The University of Michigan said that its consumer sentiment index rose to 59.7 in Dec from 56.8 in Nov, slightly up from the 59.1 preliminary mid-month reading. The forecast expected the index to come in at 59.1, unchanged from the preliminary data. Despite Dec's gain, sentiment among American consumers remains very subdued as high inflation throughout the year has weighed on moods. The University of Michigan sentiment index closed 2021 at 70.6 & was as high as 101.0 in Feb 2020, before the Covid-19 pandemic hit. Moderating price growth supported Dec's rise in confidence, said Joanne Hsu, the survey's director. "Sentiment remains relatively downbeat at 15% below a year ago, but consumers' extremely negative attitudes have softened this month on the basis of easing pressures from inflation," she said. Consumer prices rose 7.1% in Nov compared with the same month a year earlier, easing from a 7.7% increase in Oct & marking the lowest inflation rate since Dec 2021. Consumer inflation expectations declined in Dec. For the next year, Americans expect prices to rise 4.4%, less than the 4.9% anticipated in Nov. Inflation expectations for the next 5 years--a closely watched indicator for Federal Reserve officials--fell to 2.9% from 3%. Views on business conditions for the next year improved sharply in Dec, while consumers also were more optimistic over the long-term outlook. The index measuring current economic conditions rose to 59.4 in Dec from 58.8 in Nov, but fell slightly from the preliminary early-month reading of 60.2. The index of consumer expectations--which reflects the balance of respondents anticipating improved business conditions in the next 6 months--increased to 59.9 from 55.6 in Nov, up from its preliminary reading of 58.4.
U.S. Consumer Sentiment Recovered in December
The $1.7T omnibus spending bill
provides $858B for the Dept of Defense & includes $11.9B to help replenish US inventories of in-demand weapons systems
like the Javelin, Stinger & High Mobility Artillery Rocket System that
have been depleted by the war in Ukraine. The inclusion of that funding in the omnibus spending bill, which the
Senate advanced & will likely pass the House today,
seeks to address the impact aid to Ukraine has had on stockpiles of
Javelin anti-tank missiles, Stinger anti-aircraft missiles & other
items like the HIMARS. Those weapons have helped Ukraine blunt
the Russian invasion & carry out a counteroffensive to reclaim some of
the territory it lost earlier this year. Raytheon Technologies CEO Greg Hayes
said, in the first 10 months of the war in Ukraine, "We've essentially
used up 13 years worth of Stinger production and five years worth of
Javelin production." It
may take several years for the defense industrial base to expand its
production to meet ongoing demand & replenish the depleted
inventories. In addition to asking allied nations to ramp up their defense
production, the Pentagon has awarded defense firms several new contracts
since the Ukraine war began to help backfill US inventories of
systems sent to Eastern Europe.
DEFENSE DEMAND: Omnibus contains $11.9B for Pentagon to replenish weapons sent to Ukraine
Gold futures rose for the first time in 4 sessions ahead of
the Christmas holiday as a weaker $ attracted investors to the
precious metal, while bond yields narrowed. Gold for Feb closed up $8 to $1804 per ounce. The rise comes on a weaker &, which makes the metal more affordable
for intl buyers. The ICE $ index was last seen down 0.04
points to 104.4. However rising bond yields are checking gains, raising the opportunity
cost of owning gold. The yield on the US 10-year note was last seen down
0.8 basis points to 3.673%.
Gold Closes Higher on a Weaker Dollar and Lower Yields
US oil prices rose amid investors' concern over supply. West Texas Intermediate (WTI) for Feb increased $2.07 to settle at $79.56 a barrel.
WTI Crude Futures Settle Higher
There was limited trading today with many already began a long weekend holiday. Dow was in the black for most of the session while NAZ stayed near break even. YTD Dow is down a very big 3130. In Dec it lost about 1400 but eked out a gain of almost 300 this week. Not very impressive. Try to have an enjoyable & happy holiday. 😀
Dow Jones Industrials
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