Below is a major update on commodities, gold and interest rates. As noted, the last time we saw this was 18 years ago!
Commodities, Gold & Interest Rates
May 23 (King World News) – Here is what Peter Boockvar had to say as the world awaits the next round of monetary madness: Gold is performing pretty well in the face of the dollar strength. The dollar index is at the highest level since mid December and gold is 2.5% higher since then. The same can be said for the CRB index which closed yesterday at the highest level since July 2015 (see chart below).
CRB (Commodities Index) Hits Highest Level Since July 2015!
Also, gold is above where it was in mid December when the 5 yr real rate was about .35% vs .70% today. I remain bullish…
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Boockvar continues: Thanks to an almost 10 bps w/o/w jump in the average 30 yr mortgage rate to 4.86% in the US, the highest level in 7 years, mortgage applications fell again (see chart below).
30-Year Mortgage Rates Just Hit Highest Level In 7 Years!
Last Time We Saw This Was 18 Years Ago!
Boockvar continues: Purchase applications to buy a home fell for a 4th straight week by 2% and its y/o/y gain is down to 2.7%. The index sits at the lowest level in 6 weeks. Refi’s, highly sensitive to rate changes, fell by 3.7% w/o/w and are down by 27.4%. The audience of potential household’s that would refi continues to shrink with higher rates. It was in December 2000 the last time the rate of refi’s was this low. As you can’t get much more interest rate sensitive than in housing as people focus on their monthly nut, the only question was to what extent did behavior change in response to the rise in rates rather than if they would.
Also of major importance…
30 Year Trend Channel Breakout!
From legend Art Cashin: An Update From The Guru – My good friend and acknowledged mortgage maven, Barry Habib was kind enough to send an update on his yield outlook. Here’s what Barry wrote:
A quick update on the 10-year. Yields did climb to within a hair of our target at 3.04% on April 25th. The ceiling did hold, but yields took another run at it, and broke above it on May 15th. This was a convincing break, which now makes 3.04% a floor instead of a ceiling. I anticipate that this level will be tested to the downside again soon. But don’t be fooled by this head fake. Yields will move higher, with our next target at 3.35%. The break above 3.04% pushes the 10-year yield above the upper boundaries of the downward trading channel it has been in for the past 30 years!
Straight talk is Barry’s style.
Overnight And Overseas – Asian equity markets all showed losses, probably influenced by Tuesday’s afternoon selloff in New York. Japan and India saw solid selloffs but Hong Kong and Shanghai were hit more severely, likely in response to President Trump’s rather downbeat comments on trade talks.
European markets are also seeing selling pressure, again in apparent response to the President’s comments on trade.
Among other assets, Bitcoin has fallen and is trading below $8000. Gold has risen slightly and is trading just under $1300. Crude is a bit softer apparently on last night’s API data. The euro is weaker against the dollar and the yield on the ten year is down.
Consensus – Futures continue under pressure as trade talks continue to look a lot murkier than they did over the weekend. Watch that gap.
Stick with the drill – stay wary, alert and very, very nimble.
ALSO RELEASED: BULL SIGNAL: What Is Happening In Gold & Crude Oil Is Stunning CLICK HERE TO READ.
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