Guest Commentary by Matt Zeller, Senior Market Intelligence Analyst
April 17 – Dow Jones Futures are indicating a second straight rebounding day today, with the S&P 500 and NASDAQ pointing higher as well and looking to end their three-day losing streaks. Bullish investors are pointing towards positive earnings from key European companies and optimism over upcoming domestic earnings releases, as they try to get the equities markets back on track after a rough month so far. The VIX is settling back a bit today but not before a concerning rally over the past week, as the overall marketplace continues to try to digest a potential Fed pivot from the path of rate cuts that the trade so desires…
MBA Mortgage Applications for the week ending April 12 rose 3.3%, up from just a 0.1% bump on the week prior and the largest increase since the first of March; U.S. home purchases rose an even five percent after a 4.7% decline the week prior, while refinancings edged a half-point higher after nearly a 10% gain on the week ending 4/5. The average 30-year fixed mortgage rate rose from 7.01% to 7.13%; that’s back up to the highest level since December 1, 2023, though still off the 7.90% peak from late October 2023.
Mortgage rates are at risk of continuing their rise due to the rally in the ten-year treasury, with yields there steady-to-lower this morning as the trade waits for the Federal Reserve Beige Book this afternoon, but not before a five-plus month high earlier this week. Spring is normally homebuying season in the U.S., when inventories climb to a summer peak, but a continued increase in rates could put a serious dent in the market. Housing prices are likely to rise in the coming months with inflation not yet tamed, and a pivot away from expected Fed rate cuts will continue to provide support for higher treasury yields and mortgage rates.
The grain market is going nowhere fast, with corn values at least range-bound as U.S. planting kicks off (though is stalled a bit by widespread Midwest rains this week), while soybeans fare worse as the U.S. export market gets crushed by a rallying dollar and a flood of supplies flowing from Brazil to China. Planting weather will be the main market focus up until the May USDA S&D; the overall forecast is wet in the corn belt through the end of April, but the trade is rightfully optimistic over the ability of the U.S. farmer to get crops seeded in a timely fashion.
WTI crude oil spiked last Friday to squeak out nearly a six-month high but it has been downhill ever since; geopolitical heat has cooled a bit with Israel yet to respond to Iran’s weekend attack and the U.S. urging restraint. The American Petroleum Institute yesterday reported a four-plus million barrel increase in U.S. crude oil inventories on the week ending 4/12, with the DOE expected to come out with a 1.4 mln bbl crude build in this morning’s weekly inventories report. That would come after three straight weekly stocks increases, totaling over 12 mln bbls.
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