Markets ease lower as rate rally hesitates

Dow fell 157 (but off early lows), decliners over advancers better than 5-2 & NAZ finished off 13.  The MLP index stayed in the 255s & the REIT index dipped 3+ to the 291s.  Junk bond funds were mixed & Treasuries had limited selling, raising yields slightly.  Oil was up 1+ to go over 72 & gold added 2 to 2036 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Home prices are rising faster & faster each month, fueled by a decline in mortgage rates.  On a national level, home prices jumped 5.2% in Nov compared with the same month a year earlier, according to a new report from analytics firm CoreLogic.  That's up from a 4.7% annual gain in Oct.  States in the Northeast led the gains, with Rhode Island (11.6%), Connecticut (10.6%) & New Jersey (10.5%) seeing the strongest growth.  Areas seeing year-over-year price declines in Nov were Idaho (-1.3%), Utah (-0.4%) & DC (-0.2%).  “This continued strength remains remarkable amid the nation’s affordability crunch but speaks to the pent-up demand that is driving home prices higher,” Selma Hepp, chief economist for CoreLogic.  “Markets where the prolonged inventory shortage has been exacerbated by the lack of new homes for sale recorded notable price gains over the course of 2023,” she added.  The lower the mortgage rate, the greater the buying power for consumers.  While prices are expected to soften slightly later next year, much of that will depend on supply.  At current low supply levels, & demand increasing due to lower mortgage rates, for now at least, prices have nowhere to go but up.  After hitting more than a dozen record lows in the first 2 years of the Covid pandemic, mortgage rates began rising sharply in 2022 & hit a more than 20-year high in Oct last year.  The average rate on the 30-year fixed loan briefly crossed over 8%.  It has since fallen back & is now in the high 6% range.  Roughly 82% of the nation’s 397 metropolitan housing markets surveyed by CoreLogic were considered overvalued.

Home prices are surging – and Detroit gained the most in November

Boeing (BA), a Dow stock, met its jetliner delivery goals & recorded a 70% boost to annual net orders in 2023, reflecting a record-shattering year of sales for planemakers.  The US manufacturer released the year-end figures as it contends with the fallout from an accident involving an Alaska Airlines 737 MAX 9, which lost a fuselage panel in mid-air last week.  BA delivered 528 planes in 2023 & booked 1314 net new orders after allowing for cancellations, up from 480 deliveries & 774 net new orders in 2022.  It delivered 396 narrowbody 737 jets last year, meeting its revised goal of at least 375 single-aisle planes but falling short of the initial target of 400-450 jets.  The target was downgraded in Oct after a manufacturing flaw by fuselage supplier Spirit AeroSystems forced the it to inspect planes, slowing deliveries.  BA delivered 73 787 Dreamliners in 2023, meeting its goal of 70-80 aircraft.  BA's orders & deliveries are likely to eclipsed by its European rival Airbus, which broke industry records for gross & net orders & beat its delivery target of 720 airplanes in 2023 with deliveries in the mid-730s.  BA won 1456 gross orders for 2023, or 1576 net orders after accounting adjustments.  The stock fell 3.22.

Boeing hits 2023 jet delivery goal in blockbuster sales year

Some renters are having difficulty paying their rent.  About 24% of American renters are experiencing rent affordability issues amid high rent prices & other factors, according to a survey by Intuit Credit Karma.  The company said the total share of adult Americans who rented amounted to 36%.  Its survey involved over 1200 US adults & took place online from Nov 20-26.   30% of millennial renters indicated they had trouble covering their rent, according to Intuit Credit Karma.  For Generation Z, it was 27%.  Meanwhile, one in 10 Americans 69 & older reported they "can no longer afford to pay their rent," the survey said.  In a separate report from online real estate brokerage Redfin pegged the median US asking rent in Dec at $1964.  That marked a 0.2% month-over-month decrease.  However, the median price that landlords were asking renters to pay in Dec remained only 4.4% cheaper than the record $2054 seen in Aug 2022.  "High supply, more so than low demand, is driving rent declines. But if mortgage rates continue to drop at a fast clip in 2024, slowing rental demand could become a major driver of rent declines. That’s because more Americans would ditch the rental market to become homeowners, leaving landlords with even more vacancies," Chen Zhao, the economics research lead at Redfin, said.  30-year fixed mortgages averaged a rate of 6.62% last week, according to Freddie Mac.  About 38% of renters said the need to cover rent has prompted them to give up certain necessities, the Intuit Credit Karma survey further found.  The inability to afford rent was pushing 19% of renters to look to their family & friends for housing, with the share of Gen Zers and millennials reporting doing so coming in at 25%, per the survey.  Intuit Credit Karma also found 46% of Americans harbored gloomy outlooks about their prospects of ever buying a home.  "Our research shows more than half of Americans (57%) allocate the majority of their income toward housing costs, leaving little room elsewhere in their budgets," Intuit Credit Karma consumer financial advocate Courtney Alev said.  "In general, it’s recommended that consumers allocate half of their income for essentials, including housing and other necessities, like groceries and household bills."  The median asking rent in America has posted declines 3 months in a row, according to Redfin.  On an annual basis, Dec's price represented a 0.8% drop.

Paying rent still a problem for 24% of renters

Gold closed with a chump change loss as the $ strengthened.  Gold for Feb closed inched higher at $2033 per ounce.  The rise comes as treasury yields were mixed ahead of inflation data coming Thurs, with the US expected to report core inflation last month fell to 3.8% from from 4% in Nov, firming hopes the Federal Reserve will ease interest rates this year.  The 2-year note was last paying 4.392%, up 0.8 basis points while the 10-year note was down 1.0 basis points to 4.021%.  The $ is higher, rebounding from yesterday's losses, with the ICE dollar index last seen up 0.37 points to 102.58.

Gold Edges Down as the Dollar Rises Ahead of Inflation Data Coming this Week

Oil prices rose after sliding in the previous session as markets weighed Middle East tensions against demand worries and rising OPEC supply.  Brent crude futures rose $1.47 (1.9%) to settle at $77.59 a barrel, while US West Texas Intermediate crude futures gained $1.47 (2.1%), to settle at $72.24 a barrel.  Geopolitical tensions in the Middle East & an ongoing supply outage in Libya offered support to prices.  On the supply side, there are some bullish factors from the closure of Libya's largest oilfield, which has affected around 0.3M barrels per day of oil production.  Some major shipping firms are still avoiding the Red Sea.  Germany's Hapag-Lloyd will continue to divert vessels around the Cape of Good Hope in the wake of maritime attacks by Yemeni Houthi militants.

Oil Rises 2% as Middle East Crisis, Inflation Fight in Focus

Selling in the AM gave way to modest buying in the PM which trimmed losses.  Traders are waiting to see important inflation data & the first corp earnings reports later this week.  Meanwhile stocks meander.

Dow Jones Industrials