Dow finished down 140, advancers over decliners about 2-1 & NAZ gained 61. The MLP index was flattish in the 226s & the REIT index added 2+ to the 361s. Junk bond funds fluctuated & Treasuries had limited selling, raising yields. Oil rose chump change in the 71s & gold pulled back 6 to 1975 (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)
As Americans dealt with high inflation and recession fears, they also faced record debt, according to the latest data by the New York Fed. Total household debt increased to $17.05T in Q1-2023, the NY Fed reported. That marked an increase of $148B qtr-over-qtr. Overall, America's debt balance now stands about $2.9T above where it was at the close of 2019, right before the COVID-19 recession. Credit card balances remained flat at $986B, the NY Fed said. Nonetheless, credit card debt remains at record highs, according to the Consumer Financial Protection Bureau (CFPB). "Credit cards are one of the most common financial products in our country, providing the bulk of short-term credit for families," the CFPB said. "Interest rates on credit cards have risen substantially, with average interest rates going over 20%. Given the trends for the 175 million Americans with credit cards, the CFPB estimates that outstanding credit card debt may continue to set records and could even hit $1 trillion." But credit cards aren't the only source of debt that is weighing on many Americans. Auto loan balances increased by $10B in Q1-2023, the NY Fed found. And mortgage balances increased by $121B to reach $12.04T by the end of Mar. However, mortgage loan originations decreased to their lowest levels since 2014. "The mortgage refinancing boom is over, but its impact will be seen for decades to come," said Andrew Haughwout, director of household & public policy research at the NY Fed. "As a result of significant equity drawdowns, mortgage borrowers reduced their annual payments by tens of billions of dollars, providing additional funding for spending or paydowns in other debt categories."
America's debt hits new record of more than $17 trillion: NY Fed
Historically high inflation took a notable toll on Americans' finances last year, when rising prices outpaced wage gains & chewed into household budgets, according to newly released Federal Reserve data. The central bank's 2022 Survey of Household Economics & Decision Making (SHED) report, which was fielded from Oct 2021 thru Nov, 2022, found the share of US adults who reported they were worse off financially than a year earlier jumped from 20% to 35%, the highest level since the question was first asked nearly a decade ago. "Overall financial well-being declined markedly," according to the report, which found 73% of respondents said they were doing at least OK financially last year, a drop of 5 points from the year prior. The share of adults who reported spending less than their income in the month before the survey fell below pre-pandemic levels, while the share of Americans who reported their credit card debt increased rose. The Fed said "inflation affected people's spending & saving choices in several different ways," pointing out that nearly two-thirds of adults stopped using a product or used less because of higher prices, 64% switched to a cheaper alternative, & 51% of Americans reduced their savings due to their budgets being squeezed. Working adults also showed greater anxiety about being able to afford to retire. Only 31% of non-retirees reported that their retirement savings plans were on track last fall, a 9-point drop from 2021. Although inflation has eased from a peak of 9.1%, it remains roughly more than double the pre-pandemic average & well above the Fed's 2% target rate. The Fed has raised interest rates 10 consecutive times to the highest level in 16 years in its most aggressive tightening campaign since the 1980s as it battles to bring prices down, but another survey shows America's top economists do not expect the central bank to reach its 2% goal any time soon.
Inflation pummeled US household finances last year, Fed survey finds
White House negotiators & representatives of House Speaker Kevin McCarthy resumed debt ceiling talks, as Pres Biden prepared to meet with McCarthy face to face with only 10 days to go until the US risks default. The talks came after a dramatic weekend during which negotiations broke down Fri over an apparent impasse on gov spending levels but resumed several hours later. Biden & McCarthy spoke by phone Sun evening, a conversation they described as “productive” & which could set the stage for anticipated progress toward a deal in the first part of this week. Biden & McCarthy are set to meet this evening in the Oval Office. The White House team, composed of presidential counselor Steve Ricchetti, Office of Management & Budget Director Shalanda Young & legislative affairs director Louisa Terrell, declined to speak with reporters as they walked into the Capitol for talks with McCarthy today. White House negotiators & representatives of House Speaker Kevin McCarthy resumed debt ceiling talks today, as Pres Biden prepared to meet with McCarthy face to face with only 10 days to go until the US risks default. Biden is hoping to reach a debt limit deal that would push the next deadline out past the 2024 presidential election. But House Reps, who so far have endorsed only a one-year hike, say that if Biden wants more time, then he will need to agree to even more cuts. Over the weekend, the pres also faulted Reps for demanding that huge chunks of federal discretionary spending be exempted from their proposed topline budget cuts, including defense & potentially veterans health benefits. If these categories were actually to be exempted, Biden explained, then cuts to all the other discretionary spending would need to be much deeper in order to make up the difference. Across-the-board cuts like these “make absolutely no sense at all,” Biden said yesterday in Japan. “It’s time for Republicans to accept that there is no bipartisan deal to be made solely, solely, on their partisan terms.”
Biden and McCarthy to meet on the debt ceiling with only 10 days until U.S. risks default
Gold futures finished lower, holding below the key $2000 level as the stock market awaits a meaningful update with US debt ceiling negotiations & to see how bad tensions get between the US & China. Until market stress eases, gold will drift lower. Pres Biden's meeting with House Speaker Kevin McCarthy was scheduled later today. Gold for Jun settled at $1977 an ounce, down $4 for the session.
Gold futures end lower, extending their loss from last week
Oil futures shook off early declines to end higher, with U.S. prices up by more than 1% as the Jue contracts expired at the end of the session. The recovery for oil prices wasn’t driven by anything specific, so it remains to be seen where prices are headed from here. However, the weaker demand narrative is now mostly priced in & short sellers have less reason to take prices lower than a couple of weeks ago. Natural-gas futures, meanwhile, settled near the day's lows, down more than 7% for the session after posting a rally of just over 14% last week. Jun West Texas Intermediate crude rose 44¢ (0.6%) to settle at $71.99 a barrel on the contract's expiration day. Jun natural gas fell 19¢ (7.2%) to settle at $2.40 per M British thermal units.
Oil prices give up early losses to finish higher; natural-gas futures drop over 7%
The Dow dipped into the red in early trading & stayed there for the rest of the trading session. There is not much for traders to do these days. Everybody is waiting to hear about a deal on the debt crisis in DC. And the waiting period is expected to last until Jun 1, if not later. Investors need to keep their fingers crossed for a favorable outcome.
Dow Jones Industrials
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