Dow rebounded all of 47, advancers over advancers better than 3-1 & NAZ was up 90. The MLP index stayed in the 259s & the REIT index crawled higher but is still below 371. Junk bond funds were mixed & Treasuries had limited buying which reduced yields (more below). Oil just slid back a little in the 77s after an early rise (more below) & gold declined 7 to 1999.
AMJ (Alerian MLP Index tracking fund)
After a brief reprieve in Dec & Jan, mortgage rates are moving higher again, & that is taking its toll on mortgage demand. Total mortgage application volume fell 2.3% last week 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) increased to 6.87% last week from 6.80% the week before, with points rising to 0.65 from 0.59 (including the origination fee) for loans with a 20% down payment. That is the highest rate since early Dec. Applications to refinance a home loan, which are most sensitive to weekly rate changes, fell 2% for the week but were 12% higher than the same week one year ago. Rates are still about ½ a percentage point higher now than they were a year ago, but the recent drop in rates from a 20-year high last fall has brought more borrowers out looking for any savings they can get. The vast majority of current borrowers, however, have loans with rates far lower than those available today. Applications for a mortgage to purchase a home dropped 3% for the week & were 12% lower than the same week a year ago. “Purchase applications remained subdued as elevated rates continue to add to affordability challenges along with still-low existing housing inventory,” said Joel Kan, an MBA economist. A recent report from Redfin showed an 8% drop in pending home sales over the last 4 weeks compared with the same period a year ago. These measure signed contracts on existing homes. “We’re seeing a bit of recovery with house hunters touring homes, but even demand at the earliest stages isn’t up as much as we would expect at this time of year,” said Chen Zhao, Redfin's economic research lead. That's because mortgage rates are climbing again & winter weather has been harsher than usual in much of the country, keeping some house hunters at home.”
Mortgage rates surge higher again, causing homebuyers to pull back
Crude oil futures rose as Israel launched a wave of strikes in Lebanon. The West Texas Intermediate (WTI) contract for March gained 53¢ to $78.40 a barrel & the Brent contract for Apr was trading at $83.31 a barrel, up 54¢. The moves came after Israel launched an extensive wave of attacks in Lebanon, Israel Defense Forces spokesperson Daniel Hagari said. The strikes were in reaction to rockets fired into northern Israel killed 1 person & injured at least 7 more. WTI & Brent have gained 5.5% & 4.6%, respectively, in the last week as the war between Israel & Hamas in Gaza rages on with no ceasefire in sight. CIA Director William Burns is in Cairo to facilitate negotiations involving Israel, Hamas, Qatar & Egypt aimed at securing a truce in the fighting in exchange for Hamas releasing hostages.
Oil prices rise as Israel launches strikes in Lebanon
Treasury yields eased as investors digested the latest
inflation data & considered what it could mean for interest rates. The yield on the 10-year Treasury was last nearly 2 basis points lower to 4.3% after climbing by as many as 15 basis points yesterday & the 2-year Treasury yield was down 5 basis points to 4.61%. Yesterday, it rose by as many as 19 basis points. Yields & prices move in opposite directions & 1 basis point equals 0.01%. Treasury yields had soared yesterday after Jan's consumer price index reading came in hotter than expected. Prices increased by 0.3% in Jan from Dec & by 3.1% on an annual basis. The forecast had been expecting prices to rise by 0.2% & 2.9%, respectively. The data prompted renewed concerns that interest rate cuts would not begin for some time & that there could be fewer rate cuts than expected this year. Federal Reserve officials have in recent weeks said they are looking to economic data to boost their confidence that inflation is moving back to the 2% target range before making decisions about rate cuts. Traders were last pricing in just an 8.5% chance of a Mar rate cut according to CME Group's FedWatch tool, down from around 80% a few weeks ago. With the expectation that rates will stay higher for longer come renewed concerns that elevated interest rates could lead to an economic downturn, a fear that has persisted among investors since the Fed's rate-hiking cycle began in early 2022.
Today's attempt for a rebound in the stock market is feeble. Rising interest rates are something investors & consumers to not like to see. On the economic side, the housing market remains sluggish & the auto market is being adversely affected. After treading sideways for several months, oil could be breaking out to the upside with all the unrest in the MidEast.
Dow Jones Industrials
No comments:
Post a Comment