Dow retreated 286 (near session lows again), decliners over advancers 2-1 & NAZ was off 202. The MLP index settled down 1 to the 251s & the REIT index edged down 1+ to the 325s. Junk bond funds remained weak & Treasuries continued to be sold, bringing higher yields. Oil slid lower in the 89s following recent strength & gold was up 12 to 1993 (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)
The average 30-year fixed mortgage rate just hit 8% for the first time since 2000, putting housing financing costs at historically high levels. Given high prices & high interest rates, homebuyers must earn $115K to afford a median-priced house in the US, according to a recent report by Redfin, a real estate firm, which analyzed median monthly mortgage payments in Aug 2023 & Aug 2022. The firm considers a monthly mortgage payment to be affordable if the homebuyer spends no more than 30% of their income on housing. At the time of the analysis, the average 30-year fixed mortgage was 7.07%. However, the median US household income was $75K in 2022, Redfin found. While hourly wages in the US grew by 5% over the last year, according to the real estate firm, that has not outpaced rising housing costs. Those current market trends have left homeownership out of reach for many people, experts say. “Housing affordability is incredibly difficult for potential home buyers,” said Jessica Lautz, deputy chief economist & VP of research at the National Association of Realtors. In Aug 2020, the typical monthly mortgage payment was $1581, based on an average interest rate of 2.94%, Redfin found. At the time, the typical house cost roughly $329K & homebuyers would have needed an annual income of $75K to afford it. However, those record low levels were the result of “highly unusual events, like a pandemic and a nearly catastrophic financial crisis,” said Mark Hamrick, senior economic analyst at Bankrate.com. Nowadays, the typical US homebuyer's monthly mortgage payment is $2866, according to Redfin, an all-time high. While the economy & the housing markets move thru cycles, it's unlikely for mortgage rates to decline substantially in the near term, especially as the Federal Reserve is expected to keep the benchmark rate high for longer, added Hamrick.
As mortgage rates hit 8%, home ‘affordability is incredibly difficult’
Initial filings for unemployment benefits dipped last week, indicating that the US labor market remains tight & a potential factor in persistent inflation. Weekly jobless claims totaled a seasonally adjusted 198K last week, the Labor Dept reported. That marked a decline of 13K from the previous week & was below the for 210K & the lowest weekly level since Jan. Claims have been in a general deceleration pattern since the summer, but some economists worry that could change. Announced layoffs have been on the rise in recent weeks, indicating that the tide of lower claims could turn soon. Continuing claims, which run a week behind, totaled 1.734M, up 29K from the previous week & higher than the estimate for 1.698M. The labor market has been a critical factor in the Federal Reserve's deliberations over monetary policy. Officials worry that a still-tight labor market could provide upward pressure on prices even after the central bank has raised rates 11 times totaling 5.25 percentage points since Mar 2022.
U.S. weekly jobless claims total 198,000, fewer than expected
The Biden administration requested more than $105B from Congress to support the security needs of Ukraine, Israel, Taiwan & the US southern border. Pres Biden's biggest request in the package is more than $61B for Ukraine. Since Russia’s full-scale invasion of Ukraine in Feb 2022, the US has unleashed an arsenal worth $44B in security assistance, according to figures provided by the State Dept. He's also calling for an additional $14.3B for Israel, another $2B for Taiwan & Indo-Pacific security, & a little over $9B for humanitarian assistance. Israel is at war with Hamas after the militant group launched a shocking & brutal terrorist attack Oct 7. Meanwhile, there are rising tensions around Taiwan, which China claims as its own. The White House said the supplemental funding request invests approximately $50B in the US defense industry. “The funding will expand production lines, strengthen the American economy, keep us safe, and create new American jobs,” Shalanda Young, director of the Office of Management & Budget, said. The request comes as business in Congress is at a standstill as the House GOP remains divided over who should be the speaker. Additionally, the White House is seeking $6.4B for border operations, pushing back against Reps who have criticized it for not doing enough to contend with migration from Latin America. The request also includes about $1.2B for efforts aimed at countering fentanyl, which has driven a wave of deadly overdoses in the US.
Biden seeks $105 billion for Ukraine, Israel, Taiwan, border security
Gold prices rose again, climbing to an 11-week high as the metal continues to attract safe-haven buying as Israel's war against Hamas continues. Gold for Dec closed up $13 to settle at $1994 per ounce, rising for a 4th-straight day to the highest since Jul 31. The rise comes amid high treasury yields & a strong $, usually bearish notes for the precious metal. However Israel's war on Hamas after the group's terror attacks earlier this month have investors on edge & turning to gold as a safe haven. Today's move higher follows a speech yesterday from Federal Reserve chair Jerome Powell, who suggested the central bank may not raise interest not raise interest rates at its next policy meeting, while indicating rates may not be lowered as swiftly as market expectations, pushing yields on the 10-year treasury note to a 16-year high yesterday.
Gold Closes at an 11-Week High, Rises For a Fourth Day as War in Israel Boosts Safe Haven Buying
Oil futures ended with a loss, but remained higher for the week with traders weighing the potential for the spread of violence in the Middle East following the start of the Israel-Hamas war earlier this month. Nov West Texas Intermediate crude fell 62¢ (0.7%) to settle at $88.75 a barrel, with the contract expiring at the end of today's session. Front-month prices ended the week 1.2% higher. The new front month Dec contract settled at $88.08, down 29¢.
Oil Futures End Lower for the Session, Up for the Week
Today was another listless day for the stock market. That has become common recently. This week the Dow fell 540 & is down 2400 since the end of Jul, while the 10 year Treasury yields have risen from 4% to about 5% & gold has had a modest gain. Risky investments, such as stocks, are out of favor. That trend may continue for awhile.Dow Jones Industrials
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