Dow dropped 466, decliners over advancers about 6-1 & NAZ pulled back 206. The MLP index was off 1+ to 226 & the REIT index sank 7+ to 391 on higher interest rates. Junk bond funds traded;lower & Treasuries were heavily sold, raising Treasury yields (more below). Oil slid below 76 & gold was off 1 to 1848.
AMJ (Alerian MLP Index tracking fund)
US existing home sales slowed for the 12th consecutive month in Jan as high mortgage rates, surging inflation & steep home prices sapped consumer demand from the housing market. Sales of previously owned homes tumbled 0.7% in Jan from the prior month to an annual rate of 4M units, according to the National Association of Realtors (NAR). On an annual basis, existing home sales are down 36.9% when compared with Jan 2021. "Home sales are bottoming out," Lawrence Yun, the chief economist at NAR, said. "Prices vary depending on a market’s affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines."
Existing home sales unexpectedly fall in January for 12th straight month
US household debt jumped to the highest level since the 2008 financial crisis last year as mortgages surged amid high inflation & rising interest rates, according to a new analysis published by WalletHub. The
findings show that household debt, which increased by $320B in
the final 3 months of 2022, hit a 15-year-high of $17T. On
average, a typical household owed a total of $143K at the end of the
year. "We’re not quite to the breaking point, but U.S. households can’t afford to take on too much more debt, especially if the economy takes a turn
for the worse," said Jill Gonzalez, a WalletHub analyst. "People should
be thinking about how to shed debt and get in shape for a recession,
not assuming a bit more debt will make no difference." Mortgage debt rose
by $290B last year, according to the report, the 2nd-highest
annual increase since the end of the last recession. The average
household held about $101K in mortgage debt at the end of Dec,
just $12K below the projected breaking point for a mortgage. The data comes just a few days after new data from the New York Federal Reserve revealed that in the last 3 months of 2022, credit card balances increased by $61B to $986B. That smashed the previous high of $927B, recorded before the COVID-19 pandemic began. The
rise in credit card usage & debt is particularly concerning because
interest rates are astronomically high right now. The average credit
card APR, or annual percentage rate, set a new record high of 19.14%
last week, according to a Bankrate.com database that goes back to 1985. The previous record was 19% in 1991. The latest data marks a major reversal from just 2 years ago when
households were rapidly paying off credit card debt with the stimulus
payments that they received during the pandemic. On top of that, fewer
Americans were spending on big-ticket items like vacations because of
the virus-induced lockdowns.
Household debt rockets to highest level since 2008 financial crisis
Treasury yields climbed as bond markets reopened & investors awaited key economic reports due this week. The yield on the 10-year Treasury was up by 10 basis points at 3.93% & the 2-year Treasury was last trading at 4.7% after rising by more than 8 basis points. Yields & prices have an inverted relationship & one basis point equals 0.01%. Economic data is slated for later in the week, including the personal consumption expenditures price index on Fri, which is one of the Fed's favored inflation gauges. Minutes from the Federal Reserve's latest meeting on Jan 31 & Feb 1, which concluded with a 25 basis point interest rate hike, are expected tomorrow. Investors will be scanning them for clues about the central bank's future policy path. Many have been concerned about the impact of higher rates on the US economy. Fed officials have not, however, ruled out further rate hikes.
Treasury yields rise as investors weigh key economic data
Yields are reaching levels that not been seen in years & that is scaring investors. In particular, the rates on short term Treasuries are extraordinarily high. That is the inverted yield curve which is considered the signal of a coming recession. To many it feels like the economy is already in a recession, even if it is only a mild one.Dow Jones Industrials
No comments:
Post a Comment