Dow lost 31, advancers barely ahead of decliners & NAZ rose 133. The MLP index was even at 223 & the REIT index was up fractionally higher in the 363s. Junk bond funds had some buying & Treasuries saw a little selling. Oil slid back to the 76s & gold went up 4 to 2009.
AMJ (Alerian MLP Index tracking fund)
House Rep leaders were still aiming to pass legislation this week that raises the debt ceiling & cuts federal spending, after spending hours behind closed doors & agreeing to some changes in order to secure passage of the most important piece of legislation so far under House Speaker Kevin McCarthy's tenure. The touch-&-go nature of the vote could be seen throughout yesterday, as McCarthy & others said late in the day that a vote would be held "this week" after several GOP lawmakers said earlier a vote was expected today. When asked about timing, McCarthy said, "We always said we're going to vote this week, so we're just working through, and we'll take it up." While GOP leaders resisted changes to the bill, they relented in the early hours today & agreed to tweak the bill in ways they hope will secure the votes needed for passage. It still was not clear which day this week the vote would take place. The Limit, Save, Grow Act was unveiled last week amid a tense standoff over the debt limit between House Reps & the Dems in the White House & Senate. It would cap federal spending at fiscal year 2022 levels & increase work requirements to receive federal benefits, among other measures. It would also raise the gov's borrowing limit thru the end of Mar 2024 or by $1.5T – whichever benchmark is hit first. On the left, Dems have insisted on nothing but a "clean" debt ceiling increase without attaching spending cuts. However, it became clear last week that not every Rep was on board, & with just a thin majority in the House, the Speaker can only afford to lose 4 votes to still pass the bill.
GOP pushes ahead with debt ceiling vote after late-night negotiating
First Republic (FRC) stock sank again today as investors kept an eye on a potential rescue deal for the troubled regional bank. Shares extended losses of nearly 50% yesterday. The stock is down more than 90% YTC & hit an
all-time low today, being halted multiple times for volatility. This week's drop for FRC comes after the lender Mon said it lost roughly 40% of its deposits
in Q1. FRC was seen by customers &
investors alike as a risky bank after the collapse last month of Silicon
Valley Bank, which had a similar financial profile. FRC also said in its quarterly report Mon that it was reviewing
strategic options to help reshape its balance sheet. The steep
decline in deposits came despite a group of 11 larger banks infusing $30B of deposits into FRC in an attempt to instill
confidence & prevent bank runs from spreading. Advisors to FRC are trying to convince at least some of those banks to provide
further support by buying some of its assets at
above-market rates. Those
purchases would result in losses for the other banks, but FRC's advisors are trying to sell the banks on the idea that
letting FRC would be even more expensive if it led still
higher regulatory costs & fees. Sources said today that gov officials
are currently unwilling to intervene in the FRC rescue
process. The stock sank 1.63 (20%).
If you would like to learn more about FRC, click on this link:
club.ino.com/trend/analysis/stock/FRC_aid=CD3289&a_bid=6aeoso5b6f7
First Republic’s dramatic slide continues, stock falls 35% as bank looks for rescue deal
The recent softening in house prices may be helping homebuyers swallow higher mortgage rates. Despite a rise in rates last week, demand for mortgages rebounded. Total mortgage application volume rose 3.7% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726K or less) increased to 6.55% from 6.43%, with points remaining at 0.63 (including the origination fee) for loans with a 20% down payment. “Although incoming data points to a slowdown in the U.S. economy, markets continue to expect that the Fed will raise short-term rates at its next meeting, which have pushed Treasury yields somewhat higher,” wrote Joel Kan, MBA's deputy chief economist. “As a result of the higher yields, mortgage rates increased for the second straight week to their highest level in over a month.” Despite higher rates, mortgage applications to buy a home, which had plummeted the week before, rose 5% last week. They were, however, 28% lower than the same week one year ago. Homebuyers today are seeing house prices ease & that may be boosting demand. While prices are still higher than they were a year ago on a national basis, some of the most expensive metropolitan markets are now seeing prices lower than a year ago. 7 states — California, Washington, Montana, Idaho, Nevada, Utah & Oregon — as well as the DC, all reported lower prices in Feb compared with Feb 2022, according to CoreLogic. Applications last week to refinance a home loan increased 2% from the previous week & were 51% lower than the same week a year ago. One year ago, the average rate on the 30-year fixed was 5.37%, but in 2021 rates were in the low 3% range, so the vast majority of borrowers already have much lower rates than those offered today. Mortgage rates fell slightly to start this week, as investors digested news of regional bank earnings as well as concern over the debt ceiling.
Mortgage demand rebounds, even as interest rates hit the highest level in over a month
These are trying times for nervous investors. Besides concerns about what new earnings reports will say, FRC & debt negotiations are getting a great deal of attention.Dow Jones Industrials
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