Dow was off 29, advancers over decliners about 5-4 but NAZ jumped 285. The MLP index recovered 2+ to 301 & the REIT index fell 2+ to 418. Junk bond funds eased higher & Treasuries had modest selling which increased yields. Oil went higher in the 69s as the US reportedly considers oil sanctions on Russia & gold surged 36 to 2754.
Dow Jones Industrials
Inflation ticked higher again in Nov as prices remained stubbornly high for consumers, leaving Federal Reserve policymakers with fresh data to consider ahead of their meeting next week when another interest rate cut may be announced. The report showed that inflationary pressures in the US economy remain persistent despite progress in bringing inflation closer to the Federal Reserve's 2% target over the past year. High inflation has created severe financial pressures for most US households, which are forced to pay more for everyday necessities like food and rent. Price hikes are particularly difficult for lower-income Americans, because they tend to spend more of their already-stretched paycheck on necessities & have less flexibility to save money. Housing costs accounted for nearly 40% of the headline CPI gain in Nov, as the index for shelter increased 0.3% on a monthly basis. Shelter prices are up 4.7% from last year. Energy prices also rose 0.2% in Nov after they were unchanged in the prior month & were down 3.2% from a year ago. Gasoline prices rose 0.6% on a monthly basis but are down 8.1% from last year. Electricity costs declined by 0.4% in Nov but are up 3.1% on an annual basis. Food prices were also higher for the month of Nov, up 0.4% for the month & 2.4% over the last year. The cost of food at home was up 0.5% on a monthly basis & 1.6% compared with a year ago. Food away from home rose 0.3% for the month & was up 3.6% from last year. Prices for meats, poultry, fish & eggs were up 1.7% for the month & 3.8% from a year ago. Egg prices rose 8.2% in Nov & are up 37.5% from last year due in part to a bird flu outbreak. Prices for transportation services were flat on a monthly basis but are 7.1% higher than a year ago. Auto insurance is up 12.7% on an annual basis, though it rose just 0.1% compared with last month. Motor vehicle repair costs were up 0.5% on the month & are 7.8% higher than last year. Postage & delivery services are up 9.8% from last year despite a decline of 0.1% in Nov. Postage costs are up 10.6% while delivery services are up 4.4% on an annual basis.
Inflation rises in November as the Fed weighs another interest rate cut
Mortgage rates fell again last week. While the drop wasn't huge, it was enough to spur current homeowners to look for some savings. The surge in refinances was behind a 5.4% increase in total mortgage demand compared with the previous week, according to the Mortgage Bankers Association's (MBA) seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766K or less) decreased to 6.67% from 6.69%, with points falling to 0.66 from 0.67 (including the origination fee) for loans with a 20% down payment. That was the 3rd straight weekly decline. Applications to refinance a home loan surged 27% week to week & were 42% higher than the same week 1 year ago. The percentages are large, likely because the base volume is still so small. Most borrowers today have mortgages with rates well below what is now being offered. From 2020 through the first ½ of 2022, rates were below 4%. Mortgage rates last week were 40 basis points lower than they were the same week 1 year ago. The refinance share of mortgage activity increased to 46.8% of total applications from 38.7% the previous week. Applications for a mortgage to purchase a home fell 4% for the week & were 4% higher than the same week 1 year ago. Demand from homebuyers had been gaining over the last several weeks, as more inventory came on the market. “Purchase applications remained relatively strong and have shown annual gains in all but one week over the past three months. In addition to lower rates, purchase activity continues to be supported by sustained housing demand and inventory that continues to grow gradually in many markets,” wrote Joel Kan, an MBA economist said. “There’s no question that Wednesday morning’s CPI data is the last significant piece of the puzzle that the Fed will receive before deciding ‘to cut or not to cut’ next week,” wrote Matthew Graham, COO at Mortgage News Daily. “The market knows this, of course. As such, a big deviation from forecasts would definitely be enough to get things moving.”
Mortgage refinance demand surges 27%, as interest rates drop for the third straight week
Treasury yields fell slightly after Nov's consumer price index data matched expectations. The 10-year Treasury yield dipped 2 basis points to 4.21% & the 2-year Treasury declined 5 basis points to 4.10%. Yields & prices have an inverted relationship & 1 basis point is equivalent to 0.01. Inflation insights above are some of the last key economic data points due to be released before the Fed's monetary policy meeting next week. The central bank is set to announce its next interest rate decision as well as share guidance about the policy & economic outlook on Dec 18. Traders increased their bets for a rate cut from the Fed next week, pricing in a near 100% chance for a reduction.
Treasury yields dip as November CPI meets consensus
US stocks mostly rose, led by Big Tech, as investors digested another month of sticky inflation data that met expectations & likely pointed to a Federal Reserve interest rate cut next week. The tech-heavy NAZ jumped as Google parent Alphabet's (GOOG & GOOGL) shares extended gains to hit new record highs. Fresh inflation data out today showed consumer prices rose as forecast in Nov, keeping the Federal Reserve on track to lower interest rates again in Dec.
No comments:
Post a Comment