Dow rose 92, advancers over decliners better than 2-1 & NAZ went up 55. The MLP index added 1+ to the 255s & the REIT index added 1+ to the 394s. Junk bond funds also crawled higher & Treasuries were pretty much flat bringing small changes to yields (more below). Oil rose 1+ to the 75s & gold slid back 1 to 2068.
AMJ (Alerian MLP Index tracking fund)
Home prices rose 4.8% nationally in Oct compared with Octr 2022, according to the S&P CoreLogic Case-Shiller home price index. That's a jump from the 4% annual increase in Sep & marks the strongest annual gain seen in 2023. The 10-city composite rose 5.7%, up from a 4.8% increase in the previous month & the 20-city composite rose 4.9%, up from a 3.9% advance in Sep. The strength in home prices came despite a sharp rise in mortgage interest rates in Oct. The average rate on the 30-year fixed loan crossed 8% on Oct 19, according to Mortgage News Daily. That was the highest level in more than 2 decades. Rates, however, dropped steadily thru Nov & more sharply in Dec, with the 30-year fixed rate now hovering around 6.7%. “Home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher,” said Brian Luke, head of commodities, real & digital assets at S&P DJI. “With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation.” Among the top 20 cities, Detroit reported the largest year-over-year gain in home prices at 8.1% in Oct. San Diego followed with a 7.2% increase & then New York with a 7.1% gain. Home prices in Portland, Oregon, fell 0.6%, the only city in the index showing lower prices in Oct versus a year ago. “Home price gains in the CoreLogic S&P Case-Shiller Index have increased by 7% since the beginning of the year and are 1% higher than at the peak in 2022, recovering all losses recorded in the second half of 2022,” said Selma Hepp, chief economist at CoreLogic. “Given the stronger seasonal gains seen in early 2023, annual home price appreciation should accelerate this winter before slowing again next year.”
October home prices post biggest gain of 2023, despite higher mortgage rates, says S&P Case-Shiller
Struggles with the economy highlight a key conundrum puzzling economists: Why does the average American feel so bad about an economy that's otherwise considered strong? By many accounts, it has been a good year on this front. The annualized rate of price growth is sliding closer to a level preferred by the Federal Reserve, while the labor market has remained strong. There's rising hope that monetary policymakers have successfully cooled inflation without tipping the economy into a recession. Yet closely watched survey data from the University of Michigan shows consumer sentiment, while improving, is a far cry from pre-pandemic levels. Dec's index reading showed sentiment improved by almost 17% from a year prior, but was still nearly 30% off from where it sat during the same month in 2019. “The main issue is that high prices really hurt,” said Joanne Hsu, Michigan's director of consumer surveys. “Americans are still trying to come to grips with the idea that we’re not going back to the extended period of low inflation, low interest rates that we had in the 2010s. And that reality is not the current reality.” Still, Hsu sees reason for optimism when zooming in. Sentiment has largely improved from its all-time low seen in Jun 2022, the same month the consumer price index rose 9.1% from a year earlier, as people started noticing inflationary pressures recede, she said. One notable caveat was the drop in sentiment this past May, which she tied to the US debt ceiling negotiations. The 2024 presidential election has added to feelings of economic uncertainty for some, Hsu added. Continued strength in the labor market is something economists expected to sweeten everyday Americans' views of the economy. But because consumers independently decide how they feel, jobs may hold less importance in their mental calculations than inflation. There are still more job openings than there are unemployed people, according to the latest data from the Bureau of Labor Statistics. Average hourly pay has continued rising, albeit at a slower rate than during the pandemic, & was about 20% higher in Nov than it was in the same month 4 years ago, seasonally adjusted Labor Dept figures show. That's helped boost another widely followed indicator of vibes: the Conference Board's consumer confidence index. Its preliminary Dec reading was around 14% lower than the same month in 2019, meaning it has rebounded far more than the Michigan index.
Inflation has created a dark cloud over how everyday Americans view the economy
The yield on the 10-year Treasury note dipped as the last week of the year got under way. The yield on the benchmark note was last down nearly 2 basis points to 3.893% & the 2-year note yield was up 3 basis points at 4.367%. Yields move inversely to prices. US markets were closed yesterday due to the Christmas holiday. The Federal Reserve's preferred inflation metric, the core personal consumption expenditures price index, rose 0.1% month over month in Nov & 3.2% from a year earlier. The forecast called for a gain of 0.1% for the month & 3.3% year over year. “Nothing in the report suggests that the US personal sector is close to rolling over, so the question that remains is whether the current improvement in goods costs can be sustained in a fairly high demand environment,” wrote Michael Shaoul, CEO of Marketfield Asset Management. “If it can, then the FOMC can probably make good on its intention to ease policy in 2024, but any reversal in price trend would make it much harder to justify a meaningful pivot in policy,” he added.
10-year Treasury yield dips as final week of the year kicks off
Stocks are higher, but without of enthusiasm. This is a shortened week & some traders are away on holiday. The price of oil, a key ingredient for the economy, must be watched with all the fighting going on in the MidEast.Dow Jones Industrials
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