Dow jumped 203, advancers over decliners better than 3-2 & NAZ went up 159. The MLP index stayed near 252 & the REIT index added 2+ to the 356s. Junk bond funds were mixed & Treasuries finished with a little buying, lowering yields a little. Oil was up 1+ to the 77s & gold fell 4 to 1980 (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)
Mortgage rates have been falling for weeks as high inflation eases,
but the housing market may continue to grapple with an affordability
crisis for months to come. Borrowing costs have retreated noticeably over the course of Nov as many investors believe the Federal Reserve is done hiking interest rates following two cooler-than-expected inflation reports last week. Rates
on the popular 30-year fixed mortgage fell to a two-month low of 7.44%
last week, according to Freddie Mac, down from a high of 7.79% at the
end of Oct but well above the pre-pandemic average of 3.9%. But affordability constraints are likely to persist: Rates are
expected to remain elevated in coming months, as the Fed has hinted that
it may hold interest rates at peak levels for longer than previously
anticipated. A new Bank of America analyst note suggested that lower mortgage rates do not
necessarily translate into a more favorable buyers' market & that
renting versus buying a home remains the more affordable option. "Although
a small cooling in mortgage rates is good news, buyers should
anticipate a higher-for longer rate environment," the note said. As of Oct, rent was still cheaper than mortgages in all but 2
of 97 major metro areas. That calculation
includes property tax but excludes other factors like home insurance,
utilities 7 maintenance costs that would make homeownership even more
expensive. In fact, both options became considerably more expensive following the COVID-19 pandemic.
Compared with February 2020, the S&P CoreLogic Home Price Index is
up more than 34%, while the Zillow index that measures the cost of
renting has jumped 30%. "It
clearly has not been a buyers’ market due to low affordability, but the
situation has not been all that much better in the rental market," it
said. "So comes the question, do lower mortgage rates mean that we will
soon see a more favorable buyers’ market?" The housing market
recovery will likely be "lengthy," given that the Fed's tightening
campaign pushed mortgage rates from about 3% to 8%. Homeownership is
expected to remain out of reach for many Americans until the Fed starts
cutting rates & mortgage rates fall more substantially. "Nevertheless,
once the Fed starts cutting in 2024, we should begin to see signs of
housing activity gradually picking up due to improved demand and
supply," the note added.
Mortgage rates have fallen, but the housing affordability crisis may persist
Airlines expect record travel demand this Thanksgiving & execs say they're prepared for the hordes. The Transportation Security Administration expects to screen 30M passengers from Nov 17-28, the most ever. The Sun after Thanksgiving is expected to be the busiest day during that period with an estimated 2.9M passengers taking to the skies. “We are ready for the anticipated volumes and are working closely with our airline and airport partners to make sure we are prepared for this busy holiday travel season,” TSA Administrator David Pekoske said in a travel forecast earlier this week. The year-end holidays are a crucial time for airlines to drum up revenue. Outside of peak holiday or other high-demand periods, carriers have turned to discounting fares or scaling back growth as consumers' frenetic post-pandemic travel settles back to historical norms. Meanwhile, carriers are facing higher fuel & labor costs that have eaten into their profits. But coveted travel days around the holidays can still command steep fares. And Thanksgiving will be a test to see how the aviation industry handles the year-end holidays while still managing strains like a prolonged shortage of air traffic controllers. The holiday period kicks off nearly a year after a winter storm triggered thousands of flight cancellations around Christmas. Carriers have spent months preparing to ensure that costly missteps don’t reoccur. The Federal Aviation Administration expects Thanksgiving flights to peak at 49K on the Wed before the holiday, up from the holiday peak last year of 48K. The busiest day of 2023 so far was Jun 29 with nearly 53K flights.
Airlines brace for record Thanksgiving air travel
If gas demand & oil prices remain at lower levels, drivers can prepare for more price drops at the pump leading up to Thanksgiving. The national average price of gas dipped to $3.34, a 6¢ drop from the week prior, according to the latest report from AAA. Pump prices on average are 26¢ less than a month ago & 40¢ less than a year ago. Since reaching its peak in 2023, the national average has either fallen or remained flat for 60 straight days. "Drivers this Thanksgiving can expect cheaper gas prices," AAA spokesperson Andrew Gross said. "Ten states now have sub $3 a gallon averages, and more will join soon. And there are thousands of individual stations below $2 per gallon. So savvy drivers will find savings on their way to a turkey dinner this year." Oil prices declined as tensions over a potential escalation in the Middle East subsided. Growing numbers of North American drivers are gearing up for Thanksgiving travel, according to GasBuddy’s annual Thanksgiving Travel Survey. "Forty-one percent of respondents said they plan to take a road trip this year, an 8% increase from 2022," per the survey results. "Additionally, the national average price of gas is projected to drop to $3.25 per gallon, saving Americans nearly $1.2 billion during holiday travel compared to last year. Fewer respondents (36%) also said their plans were affected by high prices this year than last year, further demonstrating the relief at the pump." Patrick De Hann, the head of petroleum analysis for GasBuddy, shared insights on how drivers are taking advantage of the lowest prices seen since last winter. "Average gas prices have plummeted in all 50 states in the weeks ahead of Thanksgiving, with $2.99 prices spreading like wildfire just in time for the start of the holiday season," De Hann said. "Drivers will be saving over half a billion dollars from Wednesday through Sunday compared to what they spent last Thanksgiving with the national average at its lowest since January." 19% of participants cited inflation as the primary factor for avoiding travel, while a significant portion of respondents (46%) noted gas prices as the main consideration when choosing a pitstop.
Gas prices dip further, bringing drivers relief ahead of Thanksgiving
Gold closed with a loss amid a weaker $ & mixed treasury yields. Gold for December delivery was closed down $4 to $1980per ounce. The precious metal failed to rise above the $2000 mark last week despite a weakening $ amid economic reports showing a slowing US economy. Safe-haven buying, which has offered support to gold prices, has also eased as concerns Israel's invasion of Gaza will spark a wider Middle East war have faded. The $ weakened on expectations the Federal Reserve will stand pat on interest rates amid the slowing economy, with the ICE dollar index last seen down 0.47 points to 103.44, down from its month high 106.88 on Nov 1. Treasury yields were mixed, with the 2-year note last seen up 0.8 basis points to 4.913%, while the 10-year note was paying 4.425% down 1.6 basis points.
Gold Shrugs Off a Weaker Dollar and Closes With a Loss
West Texas Intermediate (WTI) crude oil closed higher on expectations OPEC+ will take steps to further restrict supply after prices fell to a 4-month low last week on slowing demand & rising inventories. WTI crude for Dec closed up $1.77 to settle at $77.60 per barrel, while Jan Brent crude, the global benchmark, was last seen up $1.61 to $82.22. OPEC+ will meet on Nov.26 amid reports the cartel will take additional steps to boost prices amid rising non-OPEC supply and a slowing US economy that is hampering demand & swelling inventories. Saudi Arabia is expected to continue its 1M barrel per day supply cut, scheduled to end on Dec 31, into the new year, while other measures, including addition quota cuts, may be on the table.
WTI Crude Oil Rises as OPEC+ Expected to Take Steps to Shore Up Prices
The bulls were in command today & investors kept bidding prices higher, although there was a little selling into the close. Persistent high interest rates & a very active war in in the MidEast have not kept investors away. For the time being, thoughts of no more rate hikes which will lead to lower interest rates some time next year are all that matters. OK!Dow Jones Industrials
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