Dow dropped 231 (near session lows), decliners ahead of advancers about 3-2 & NAZ retreated 160. The MLP index went up about 1 to the 226s & the REIT index was off 3+ to the 357s. Junk bond funds were weak & Treasuries had limited buying which reduced yields. Oil rose almost 1 to the high 72s & gold finished about even (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Speaker Kevin McCarthy told his conference that the White House was still "dug in" on its stance in debt limit negotiations despite yesterday's meeting that both sides hailed as "productive," according to a source. "Members were told to remain flexible for next week" in case they have to return to vote for a new debt limit bill, the source said. "McCarthy said the White House is dug in on raising taxes and [increasing] spending but by a smaller amount than they would like." It lines up with reporting that White House negotiators have countered Reps' demand to cut spending to 2022 levels & cap it at 1% growth for the next decade with an offer to freeze current spending levels into the next fiscal year, with caps for one or 2 following years. According to the source, McCarthy told members they have to "keep negotiating" & urged House Reps to "stick together." He did not, however, offer fellow lawmakers any "points of agreement" forged between the White House & House GOP negotiators, despite having roughly a week until the gov is likely to run out of cash to pay all of its obligations. McCarthy later told reporters when he left the closed-door meeting that "we’re not there yet" in terms of a deal. He & Biden held their first bilateral meeting on the debt limit since Feb yesterday evening, with teams for both getting together afterwards to continue working on a compromise. But it appears both sides are still far apartcurrently – though McCarthy expressed optimism that a deal could still be struck by Jun 1. "They still want to spend more money next year than we spent this year. That's a red line," the speaker said. "We could still finish this by June…we're trying to condense everything in a short time frame. The House passed the bill. The Senate never passed a bill. So now it's more difficult, because of what else we have to negotiate from a lot of different perspectives. But we can still finish in time."
McCarthy warns WH 'dug in' on debt limit demands, source says
Sales of new US homes rose for the 2nd straight month in Apr as limited resale inventory helped to jolt buyer demand for new construction. New single-family home purchases rose 4.1% to a seasonally adjusted annual rate of 683K units, the Commerce Dept reported. The forecast expected new home sales, which account for a small percentage of total sales, to fall 2.6% last month. It marked the strongest pace of sales since Mar 2022, an early sign the housing market is beginning to stabilize. Sales are up 11.8% from the same time one year ago. "Home builders are fitting nicely into this spring housing season that is starved for new inventory," said Nicole Bachaud, Zillow senior economist. "Homebuyers are hungry for anything they can afford, and home builders are happy to meet them where they are." The median price for a new home, meanwhile, tumbled to $420K in Apr, marking the biggest decline since Apr 2020, when the economy was still in the throes of the COVID-19 pandemic. The interest-rate-sensitive housing market entered a deep freeze last year in the wake of the Federal Reserve's aggressive interest-rate hike campaign. But as mortgage rates have slowly declined from a peak of 7%, & as buyers grapple with limited inventory, the housing market has shown early signs of stirring back to life. At the current pace of sales, it would take roughly 7.6 months to exhaust the inventory of existing homes (6-7 months is viewed as a healthy level). The surge in new home sales likely contributed to the higher-than-expected increase in confidence among builders in the housing market this month. The National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, rose 5 points to 50, the highest reading since Jul. It marked the first time in nearly a year that the index pulled out of negative territory.
New home sales rise in April to highest level in over a year
A significant group of House Reps raised questions about whether the Treasury Dept's Jun 1 deadline to avoid a potential US debt default was accurate. “We’d like to see more transparency on how they come to that date,” House Majority Leader Steve Scalise said today. Scalise also said he believed that Treasury Secretary Janet Yellen's latest comments, out today, “implied that it’s June 1, or later, giving some openness to the idea that June 1 may not be the so called X-date.” Yellen released a new letter to congressional leaders yesterday that appeared to say the opposite of what Scalise claimed, specifically omitting a line from a previous letter about how extraordinary measures could buy the US more time to avoid defaulting on its debt. “We haven’t really been able to see a lot of transparency, but it looks like they’re hedging now and opening up the door to move that date back,” said Scalise. House Speaker Kevin McCarthy has not questioned Yellen's timeline, & today his office reaffirmed in a new release that the deadline for talks is Jun 1. “President Biden now has just 9 days to get serious and strike a responsible agreement to raise the debt limit immediately,” read the release. Debt ceiling negotiators prepared to narrow their focus to a smaller group of key issues that were ripe for compromise, an encouraging development with just 9 days left before the US faced the serious risk of a potentially catastrophic national debt default. “We’re getting closer,” McCarthy said, adding that the “circle” of issues was becoming “smaller, smaller, smaller.” The issues still on the table included reforms to energy permitting, new work requirements for some forms of federal aid & the redistribution of unused Covid-19 emergency funds. Also on the table are “health savings which could include reforms to how much the gov pays health-care companies under several major federal health insurance plans.
Republicans question June 1 debt ceiling deadline as talks zero in on potential trade-offs
Gold futures posted a back-to-back loss, settling below the key $2000 level for a 6th consecutive session . The weakness in gold prices is in part due to strength in the $. The apparent progress on the US debt talks may be prompting some added selling pressure on the safe-haven gold. Gold for Jun settled at $1974 ounce, down $2 for the session after a similar loss yesterday.
Gold futures mark back-to-back losses
Oil futures finished higher, after Prince Abdulaziz bin Salman, Saudi Arabia's energy minister warned traders about betting on continued declines in oil prices. With OPEC+ due to meet in early Jun & the market still smarting from the surprise production cut announced in Apr, there is a risk of another surprise cut in output. But there has been no indication that OPEC+ is thinking along those lines yet, however there wasn't in Apr, so it pays to be cautious. Jul West Texas Intermediate crude rose 86¢ (1.2%) to settle at $72.91 a barrel.
Oil futures end higher as top Saudi official warns traders against betting on price declines
Debt talks continue & both sides are optimistic because they have to be. Gold has slid back from near record highs last week, although these prices are still near record levels. Nervous investors are buying while the $ continues to be in strong demand.
Dow Jones Industrials
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