Dow climbed 94, advancers over decliners 3-1 & NAZ was even. The MLP index was steady in the 223s & the REIT index added 3 to the 372s. Junk bond funds.rose in price along with stocks & Treasuries saw heavy buying which reduced yields. Oil was fractionally higher to the 75s & gold was off 1 to 1997.
AMJ (Alerian MLP Index tracking fund)
Despite a year's worth of interest rate increases, inflation rose again in Mar, according to economic data that the Federal Reserve watches closely. The personal consumption expenditures price index excluding food & energy increased 0.3% for the month, in line with the estimate. On an annual basis, core PCE increased 4.6%, slightly higher than the expectation for 4.5% & down 0.1 percentage point from Feb. Including the volatile food & energy components, headline PCE also rose just 0.1% for the month, equating to a 4.2% annual increase, down sharply from 5.1% in Feb. That measure peaked out around 7% in Jun 2022, the highest level since 1981. The headline number was softer as energy prices slid 3.7% for the month while food costs declined 0.2%. Goods prices fell 0.2% while services increased 0.2%. In another key inflation measure for the Fed, the employment cost index increased 1.2% for the first qtr, higher than the 1% estimate. The inflationary pressures were reflected in the willingness of consumers to keep spending. Personal income rose 0.3% for the month but consumer spending was flat, as expected. While the annual rates are below the peaks hit in 2022, they are still well above the central bank's 2% target & further evidence that price increases are proving stickier than policymakers had anticipated.
Key inflation gauge for the Fed rose 0.3% in March as expected
The average long-term US mortgage rate rose this week for the 2nd week in a row, according to weekly data compiled by mortgage buyer Freddie Mac. The rate on the 30-year fixed mortgage climbed to 6.43% this week, up from 6.39% a week ago. One year ago, it averaged 5.10%. "The 30-year fixed-rate mortgage increased modestly for the second straight week, but with the rate of inflation decelerating rates should gently decline over the course of 2023," said Sam Khater, Freddie Mac's chief economist. "Incoming data suggest the housing market has stabilized from a sales & house price perspective," Khater continued. Meanwhile, the average rate on a 15-year fixed mortgage fell this week to 5.71%. Last week it averaged 5.76%. "The prospect of lower mortgage rates for the remainder of the year should be welcome news to borrowers who are looking to purchase a home," he said. Rates for 30-year mortgages usually track the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans. Investors' expectations for future inflation, global demand for Treasuries & what the Fed does with interest rates can also influence rates on home loans.
Average rate on long-term mortgage climbs once again
Treasury yields declined as investors digested the latest GDP figures & awaited the release of key data that could impact the Federal Reserve’s upcoming policy decision. The 10-year Treasury was at 3.454% after falling by over 7 basis points & the yield on the 2-year Treasury was last down by around 3 basis points to 4.066%. Yields & prices move in opposite directions & one basis point is equivalent to 0.01%. Treasury yields had jumped yesterday, with the 2-year Treasury gaining over 15 basis points, despite the latest GDP figures indicating slower than expected economic growth in Q1. The report showed that the GDP rose by 1.1% at an annualized pace, falling short of the 2% increase previously expected. Meanwhile, the personal consumption expenditure index (PCE), which is one of the Federal Reserve's preferred inflation gauges, came in at 4.2% on a quarterly basis. This was above the 3.7% for the previous qtr. The monthly reading of the core PCE for Mar rose 0.3%, in line with expectations. The index, which was just released, is a key measure of inflation for the Fed. The central bank is set to meet next week & is expected to hike interest rates by a further 25 basis points. Investors are also hoping for guidance about how long rates will remain elevated & when rate cuts can potentially be expected.
Treasury yields fall as investors mull over key economic data
Trading is choppy as there is a lot of data to evaluate. Yesterday's GDP data was not impressive & that weighs on the stock market today. The Dow is up about 100 for the week.Dow Jones Industrials
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