Dow dropped 146, decliners over advancers 5-2 & NAZ declined 87. The MLP index fell 2+ to the 213s & the REIT index was off 1+ to the 371s. Junk bond funds slid lower & Treasuries had limited selling, lifting yields (more below). Oil retreated 2+ to the 77s & gold sank18 to 1804.
AMJ (Alerian MLP index tracking fund)
The Strategic Petroleum Reserve (SPR) fell to its lowest level since 1983 last week as US gasoline prices & oil prices ticked up, according to federal data. The level of the SPR, an emergency stockpile of crude oil managed by the Department of Energy (DOE, declined to 375M barrels last week, marking the first time it has fallen below 378M barrels since 1983, according to the Energy Information Administration. Meanwhile, the average pump price nationwide ticked up for the 2nd consecutive day, hitting $3.13 per gallon. And yesterday the West Texas Intermediate index, the US oil benchmark, increased 1% to more than $80 per barrel whilke the Brent crude index, the top global oil benchmark, increased 2% past $85.50 per barrel. In an effort to curb rising gas & oil prices, Pres Biden first ordered the DOE to release oil from the SPR on Nov 23, 2021, saying it was a "major effort to moderate the price of oil" & lower prices at the average "corner gas station." Then, in Mar, Biden announced a 30M-barrel release & an historic 180M-barrel release following Russia's invasion of Ukraine which upended global energy markets. In Oct, Biden said the DOE would issue a sale of 15M barrels of oil from the SPR, the final release tied to the Mar announcement. He also called on the DOE to prepare for "additional significant SPR sales" throughout the winter. "Families are hurting. You’ve heard me say before, but I get it. I come from a family — if the price of gasoline went up at the gas station, we felt it," Biden remarked in. Oct. "Gas prices hit almost every family in this country, and they squeeze their family budgets." However, Reps & energy groups have argued the SPR releases have failed to effectively lower gas prices & have made the US more vulnerable to major supply disruptions in the future. Despite the historic releases, gas prices climbed past $5 per gallon in Jun, reaching an all-time high. GOP lawmakers have also announced oversight efforts & introduced legislation to prevent further releases. Last month, Senate Energy & Natural Resources Committee Ranking Member John Barrasso & House Energy & Commerce Committee Ranking Member Cathy McMorris Rodgers sounded the alarm that mismanagement of the SPR may damage the reserve's infrastructure. "As Secretary of Energy, you have overseen the largest SPR drawdown in history, selling more than 245 million barrels since President Biden’s first day in office," Barrasso & McMorris Rodgers wrote to Energy Secretary Jennifer Granholm. "This has occurred as gas prices remain high and supply chain shortages continue to plague our economy." "Instead of unleashing American energy production, you have depleted our strategic stockpile while failing to establish long-term plans for the optimal size, configuration, maintenance, and operational capabilities of the reserve," they added.
US emergency oil reserves drop to lowest level since 1983 as gas prices climb
The 10-year Treasury yield rose as investors fretted over economic growth & monetary policy direction for 2023. The 10-year Treasury yield was up by more than 1 basis point at 3.875% & the yield on the 2-year Treasury note dipped by 1 basis point and was last trading at around 4.353%. Yields & prices move in opposite directions & one basis point equals 0.01%. Economic data releases today included pending home sales, which slipped 4.0% in Nov on a monthly basis, according to the National Association of Realtors. The drop came as high mortgage rates gave prospective buyers cold feet. The forecast had expected a decline of 1.8%. Investors are bracing themselves for potential pressures related to a recession, persistent inflation & what that could mean for Federal Reserve policy, especially regarding interest rates, in 2023. Many investors are hoping for the data to signal an easing of inflationary pressures, as that would suggest that the Fed could further slow, or completely pause, interest rate hikes.
Treasury yields slip as investors gauge 2023 Fed policy
Contracts to buy US previously owned homes fell far more than expected in Nov, diving for a 6th straight month in the latest indication of the hefty toll the Federal Reserve's interest rate hikes are taking on the housing market as the central bank seeks to curb inflation. The National Association of Realtors (NAR) said its Pending Home Sales Index, based on signed contracts, fell 4% to 73.9 last month from Oct's downwardly revised 77.0. Nov's was the lowest reading, aside from the short-lived drop in the early months of the pandemic, since NAR launched the index in 2001. The forecast for contracts, which become sales after a month or 2, would fall 0.8%. Pending home sales dropped 37.8% in Nov on a year-on-year basis. “Pending home sales recorded the second-lowest monthly reading in 20 years as interest rates, which climbed at one of the fastest paces on record this year, drastically cut into the number of contract signings to buy a home,” said NAR Chief Economist Lawrence Yun. “Falling home sales and construction have hurt broader economic activity.” Contracts declined in all 4 regions, led by a 7.9% drop in the Northeast. All 4 regions also recorded double-digit declines on a year-over-year basis, with contract signings in the West down by 45.7%, by far the largest regional drop. The overall decline in signed contracts suggested that existing home sales would continue to fall after posting their 10th straight monthly decrease in Nov. The housing market has suffered the most visible effects of aggressive Fed interest rate hikes that are aimed at curbing high inflation by undercutting demand in the economy. By the Fed's preferred measure, inflation is still running nearly 3 times its 2% goal, having risen earlier in 2022 at its fastest pace in 40 years.
U.S. pending home sales sag more than expected in November
Dow Jones Industrials
No comments:
Post a Comment