Stocks sold off sharply on Monday due to the anticipated bond default by China’s Evergrande real estate conglomerate. However, stocks shrugged this off and recovered the remainder of the week ending with major indices mixed.
The Bank of Japan met and kept monetary policy unchanged but downgraded its economic outlook on supply chain concerns.
The Federal Reserve met and indicated it could start tapering bond purchases as early as the November meeting and finishing bond purchases by mid-year. Half of the Fed officials believe there could be short term rate hikes before the end of 2022 with the other half expecting them later.
Treasury yields were higher with the 30-year bond yield closing at 1.985% and the 10-Year note closing at 1.458%. Crude oil rose to $74.01 a barrel and natural gas rose to $5.226 per MMBTUs. The U.S. dollar index rose to 93.32 and gold fell to $1747.40 an ounce.
In the economic numbers:
* The National Association of Realtors reported
* Existing home sales fell 2% in August from July and 1.5% from a year earlier.
* The median price of an existing home sale in August is up 14.9% from a year earlier, down from 18% year over year in July.
* The Commerce Department reported:
* Housing starts increased 3.9% in August and July starts were revised up.
* Single-family starts fell 2.8% but multifamily starts rose 21.6%.
* Building permits, an indicator of future housing starts, rose 6.0%.
* Single family permits rose 0.6% and multifamily permits, for 5 units or more, rose 19.7%.
* The Labor Department reported:
* A seasonally adjusted 351,000 workers filed initial claims for unemployment in the week ending September 18th, up 16,000 from a revised 335,000 the week before.
* The 4-week moving average of claims, designed to smooth out volatility, was nearly unchanged at 335,750.
* Continuing claims were little changed at 2.7MM in the week ending September 11th.
* A broader measure of claims including extended benefits, pandemic assistance and other programs fell from 12.1MM to 11.3MM in the week ended September 4th.
* For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
* The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
* Field production of crude oil rose from 10.1MMBPD to 10.6MMBPD as Gulf of Mexico production recovers slowly.
* Natural gas storage rose 76BN cubic feet and is below the 5 year average at this time of year.
* Baker Hughes reported the number of active oil rigs rose 10 to 421. The number of active natural gas rigs fell 1 to 99.
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Loren C. Rex, CFP®, MA Erik A Smith AIF®
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.