Daily Market Color

Equity Markets Pause as Beige Book Released

Oil Hits 3 Year High

Crude oil today rose to a new three year high.  This move was fueled by expectations that at the April 20th meeting of OPEC members there will be a strong effort to have more members join the Cartel’s output-reduction pact.  In addition to more potential reductions in OPEC-related supply, the current US surplus decreased as 1.07 million barrels were tapped last week.  In addition supply that goes through the Cushing, OK pipeline hub was also down last week by 1.12 million barrels.  Crude oil futures ended the day up 3.4% closing at $68.76/barrel.


Mortgage Applications Jump

The number of mortgage applications in the US were up 4.9% during the week through April 13, 2018 according to a report from the Mortgage Bankers Association (MBA).  In the MBA’s report from the previous week applications had been down 1.9%. Applications tied the purchase of a home were up 6.1% while applications for refinancing were up 3.5%. According to the MBA the average rate of a fixed 30 year mortgage held steady at 4.66%.

Equity Markets Flat

US stock indices were mostly unchanged on the day as the market continues to digest what has mostly been a strong earnings season thus far.  All three major indices closed within 0.2% of where they opened the day with the Dow losing 0.16% and the Nasdaq and S&P gaining 0.19% and 0.08% respectively.  US Treasurys sold off on the day, as yields/swap rates were up 4-6bp across the curve.  The 10-year note yield was up on the day (5 bps)  closing at a yield of 2.87%.  The US Dollar was largely unchanged vs. the Euro (EUR) and up vs. the Pound (GBP) by 0.6%.

Spectre of Trade Tensions Temper Optimism

The Federal Reserve released The Summary of Commentary on Current Economic Conditions or, Beige Book as it is more commonly known.  The Beige Book is a report published by the United States Federal Reserve Board eight times a year consisting mostly of anecdotal information from businesses in each of the Fed districts.  According to the report “outlooks remained positive, but contacts in various sectors including manufacturing, agriculture and transportation expressed concern about the newly imposed and/or proposed tariffs.”  The report also found that the labor market remained tight with many companies struggling to fill open positions, especially skilled positions.  However, this has not applied significant upward pressure on wages yet.  The report is likely to lead to more debate over whether the FOMC can continue to raise rates at the pace currently forecast without the tight labor market leading to stronger inflation data. 




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