Markets rise carefully after a favorable consumer inflation report

Dow was up 103 (sharply below early highs), advancers over decliners 5-2 & NAZ added 113.  The MLP index went up 2+ to the 217s & the REIT index rose 6+ to the 391s.  Junk bond funds continued to be in demand & Treasuries remained in heavy demand, lowering yields.  Oil rose 2+ to the 75s & gold jumped 30 to 1822 (more on both below).

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Pres Biden said his economic plan is working after Treasury yields fell again, signaling that inflation is waning as the economy slowly recovers though he noted that prices "remain too high."  "When I took office we inherited a nation with a pandemic raging and an economy that was reeling," Biden said.  "Twenty-one months later, we can see how our economic plan is working."  Biden’s comments came after the Labor Dept released a consumer price index report that showed inflation, prices at the pump & in the grocery store were all coming down ahead of the Christmas season.  "Inflation is coming down in America," he told reporters, noting it was the 5th month in a row that the trend had continued.  "Make no mistake prices are still too high.  "We have a lot more work to do, but things are getting better – headed in the right direction," he added.  Biden championed his administration's role in lowering unemployment by adding new jobs in each month of his presidency & lowering the national deficit by $1.7T.  "No administration has ever cut the deficit that much. Now inflation is coming down as well," he continued.  "Prices of things like televisions and toys are going down, and it's good news for holiday season."  Biden said the fact that wages have gone up more than prices over the last several months means that Americans have "a little bit of breathing room for the holiday season."  But Biden also warned that even as the administration works to get the economy back in a more stable standing there could be "setbacks."  "It's going to take time to get inflation back to normal levels," he continued.  "What is clear is my economic plan is working, and we're just getting started."  The pres said he would not take questions before departing his briefing, but when asked when he expected consumer prices to get back to pre-pandemic levels he said he "hope[s] by the end of next year."

Biden says his economic plan to fight inflation is working despite high prices

The average rate on the 30-year fixed mortgage dropped to 6.28% today, according to Mortgage News Daily, the lowest level since mid-Sep.  The decline came after a lower-than-expected reading of the Nov's consumer price index, a widely watched measure of inflation.  The report sent investors rushing into Treasury bonds, causing yields to drop.  Mortgage rates follow loosely the yield on the 10-year Treasury.  “The second consecutive month of reassuring CPI data continues to build a case that inflation has turned a corner, but rates will be careful about reading too much into that potential shift given the volatility of the data in recent months,” said Matthew Graham, CEO at Mortgage News Daily.  “The bond market will also want to see what the Fed does with this info in tomorrow’s updated Fed rate forecasts in the dot plot.”  Mortgage rates began rising at the start of this year & accelerated in the spring & summer, with the 30-year fixed going from around 3% to well over 7% by the end of Oct.  That sent the housing market into an early deep freeze.  Sales of existing homes have fallen for 9 straight months & were down 24% in Oct year-over-year, according to the latest read from the National Association of Realtors.  But rates then fell sharply in Nov, after the CPI report for Oct indicated that inflation was cooling.  The rate ended Nov at 6.63%.   Some suggested, albeit cautiously, that the drop in rates might be bringing buyers back to the market.  “There are some very very modest green shoots over the last few weeks, as rates have come down, but I am not ready to get sucked back into the conversation we had in August when we felt better,” Doug Yearley, CEO of luxury homebuilder Toll Brothers (TOL), said.  Redfin reported homebuyer demand “has started ticking up” in Nov.  It's demand index, which measures requests for home tours & other homebuying services from Redfin agents, was up 1.5% from a month earlier but down 20% from a year earlier during the 4 weeks ending Nov 27.

Mortgage rates drop after inflation comes in cooler than expected

Boeing's (BA), a Dow stock, aircraft deliveries picked up last month with airlines getting more 737 Max & 787 Dreamliner planes.  The manufacturer handed over 48 planes last month, up from 35 in Oct.  BA also delivered 32 of its 737 Max planes to carriers.  Nov deliveries also included the 2nd-to-last Boeing 747.  The final 747, #1574, rolled out of its Everett, Washington, factory last week.  It is scheduled to be delivered to a cargo & charter airline in Q1-2023.  BA logged orders for 21 planes in Nov, which did not include United's (UAL) massive order for at least 100 Dreamliners, announced yesterday.  So far this year, BA has delivered 411 planes & logged net orders for 571 planes.  The stock rose 83¢.
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Boeing airplane deliveries picked up in November

Gold futures rallied, with prices settling at their highest since Jun, after the consumer-price index, a closely watched inflation gauge, revealed a smaller-than-expected rise in Nov.  The $ weakened sharply following the data, providing support for $-denominated gold prices.  Feb gold gained $33 (1.9%) to settle at $1825 per ounce on, the highest finish for a most-active contract since late Jun.

Gold Ends at Highest Price Since June after CPI Data Show a Slowdown in Inflation

US oil futures rallied to mark their highest finish in more than a week.  The oil market is getting a cold slap in the face as the market prepares for what potentially could be one of the coldest of cold snaps in decades.  Heating fuel demand is expected to surge, testing the wherewithal of supplies.  A cooler-than-expected US inflation reading today pressured the $, also providing support to oil priced in $.  The US benchmark WTI crude for Jan rose $2.22 (3%) to settle at $75.39 a barrel, the highest finish since Dec 5.

U.S. oil futures up 3% to highest finish in over a week

Stocks jumped out of the gate with a big advance when trading began.  But that didn't last.  For the rest of the day Dow traded with only modest gains.  There is a lot to digest in the inflation report.  Also, WTI (US oil) is near its yearly low.  Energy costs are a big part of the inflation story & very cold weather can bring higher energy prices.  Then there is that looming recession out there.  Cautious investors are still very nervous.

Dow Jones Industrials