Major stock indices rose sharply this holiday shortened week as investors became less concerned about rate increases. Early “flash” readings of purchasing manager’s indices showed economic growth may already be slowing which could cool inflation. Interest rate futures markets indicate that the FED likely will be done hiking rates before the end of the year. The market gains were bolstered on Friday by comments from Federal Reserve Bank of St. Louis president James Bullard that a recession is unlikely. However, we would caution against saying the market decline has passed bottom at this point.
Mexico’s central bank raised it’s short term interest rate 0.75% to 7.75% to fight inflation.
Treasury yields fell with the 30-year bond yield at 3.266% and the 10-Year note at 3.133%. Mortgage rates fell with the 30-year mortgage rate ending at 5.88%. U.S. crude oil fell to $107.51 a barrel and natural gas fell to $6.181 per MMBTUs. The U.S. dollar index fell to 104.11. Gold fell to $1827.50 an ounce.
In the economic numbers:
- The National Association of Realtors reported that existing home sales fell 3.4% in May to the lowest level since June 2020 and 5.8% lower than last May. Higher prices and mortgage rates as well as low inventories of existing homes was attributed for the drop.
- The median price of an existing home sale rose to $407,600, up 14.8% from last May and a record high.
- The Labor Department reported:
- Seasonally adjusted first time claims for unemployment fell to 229,000, down from a revised 231,000 in the prior week.
- The 4-week moving average of claims, designed to smooth out volatility, rose to 223,500.
- 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 was not reported “due to systems issues”.
- Natural gas storage rose 74BN 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 594. The number of active natural gas rose 3 to 157.
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Loren C. Rex, CFP®, MA Erik A Smith, AIF®
Founder / Emeritus President & C.E.O.
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.