Dow jumped 455, advancers over decliners an impressive 5-1 & NAZ went up 89. The MLP index added 2+ to the 224s & the REIT index gained 5 to the 362s. Junk bond funds rose along with the rally in stocks & Treasuries were sold, raising yields. Oil rose 2 to the 72s & gold dropped 14 to 1981.
AMJ (Alerian MLP Index tracking fund)
Employers added 339K jobs
in May, the Labor Dept said in its monthly payroll
report, easily beating the 190K jobs forecast. That also marks an increase from Apr, when
payrolls increased by an upwardly revised 294K. At the same
time, a separate report, based on a survey of households, offered a
slightly different picture of the labor market. The report indicated the
unemployment rate climbed to 3.7% from 3.4%, even though the labor
force participation rate remained unchanged last month. It was the
highest jobless rate since last Oct. Wage growth also
cooled last month, with average hourly earnings, a key measure of
inflation, rising 0.3%, in line with estimates. On an annual basis,
wages rose 4.3% in May. The Federal Reserve
is closely watching the report for evidence that the labor market is
finally softening after months of strong job gains as policymakers try
to wrestle inflation under control. Although the consumer price index
has cooled from a peak of 9.1% in Jun, it remains about 3 times
higher than the pre-pandemic average. The stronger-than-expected
jobs figure could be a worrisome sign for the Fed, which has raised
interest rates 10 times over the past year.
US economy adds 339,000 jobs in May, surging past expectations
The average long-term US mortgage rate climbed this week to its highest level since Nov, according to weekly data compiled by mortgage buyer Freddie Mac. The rate on the 30-year fixed mortgage rose to 6.79% this week from 6.57% a week ago. One year ago, it averaged 5.09%. "Mortgage rates jumped this week, as a buoyant economy has prompted the market to price-in the likelihood of another Federal Reserve rate hike," said Sam Khater, Freddie Mac's chief economist. "Although there has been a steady flow of purchase demand around rates in the low to mid six percent range, that demand is likely to weaken as rates approach seven percent." Meanwhile, the average rate on a 15-year fixed mortgage rose to 6.18% this week from 5.97% a week ago. At this time last year, the 15-year fixed-rate mortgage averaged 4.32%. Mortgage rates have ticked higher along with the 10-year Treasury yield, which lenders use as a guide to pricing loans. The yield hit 3.81% last week, its highest point since early Mar, reflecting uncertainty among bond investors over whether the federal gov would be able to avoid a debt default & renewed worries that the Federal Reserve may not be done hiking interest rates. The US housing market has been slow to regain its footing this year, with elevated mortgage rates & a thin inventory of homes on the market working to limit sales. As a result, home purchase loans were down 44.3% in the first qtr compared to the same period last year, according to an analysis by real estate data firm Attom. The higher rates have sharply reduced demand for mortgage refinancing loans, which slumped 72.5% in the first qtr from a year earlier.
Mortgage rates jump to highest level since last year
Persistent inflation & higher interest rates have strained many household budgets & consumers are shying away from some purchases such as home improvement projects or apparel. But Ms of US consumers aren't giving up their vacations. A Deloitte survey from last month found that 50% of respondents planned to take a vacation that includes paid lodging during the summer, up from 46% last year. In a sign of strong demand, the Transportation Security Administration screened close to 10M people over Memorial Day weekend, slightly more than the same period in pre-pandemic 2019. Many travelers are seeing some relief when they book airline tickets or fill up the tank before a road trip, at least compared with last year. Prices for airline tickets, for example, were down 0.9% in Apr from a year ago, according to the latest federal inflation read. And yet, consumer spending has begun moderating overall but “the categories that are holding up the strongest are the travel categories,” said Jason Gaughan, head of consumer credit card products at Bank of America. Intl travel has roared back this year as countries around the world lift pandemic restrictions. But there’s still plenty of demand for domestic destinations that dominated travel during the pandemic. That’s especially true because airlines have ramped up capacity to Europe & other intl destinations, but bargains are hard to find during the peak late spring and summer months. Airfare to Europe is averaging $1167 round trip this summer, up 36% from last year.
Consumers keep traveling despite recession fears and inflation
Yesterday, the Senate followed the House & voted to pass the Fiscal Responsibility Act, which raises the debt ceiling & limits gov spending for 2 years. This comes just days before the Jun 5 deadline, on which the US could have defaulted on its debt obligations, causing global economic turmoil. Pres Biden is expected to sign the bill into law today after weeks of tense negotiations & jitters about whether lawmakers would approve the deal, which has been criticized by Reps & Dems alike. Worries remain about what the Fed will do at its next meeting in 2 weeks.
Dow Jones Industrials
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