Daily Market Color

Tech Investment, Consumer Confidence Lead Market Lower

Oil’s Tough Day

WTI Crude oil futures fell today on the assumption that the US Stockpiles may have increased more than expected, possibly adding as much as 850,000 barrels.  In spite of continued concerns over the situation in the middle east, WTI futures closed below $65 a barrel at $64.67 down almost 1%.  While the report from the US Energy Information Administration is not due to be released till 10:30 AM tomorrow NY time, crude reacted ahead of this on expectations.  This is a big swing for oil in the past week as the news that John Bolton was appointed National Security Advisor by President Trump. This was seen as a challenge to the outflows being produced by Iran which last week had driven the price of crude toward it’s high of the year so far.

Home Prices Higher

Nationwide home prices as measured by the 20 cities in the S&P CoreLogic Case Schiller 20 City index increased 6.4% year over year.  Much of the gain in home prices is related the lack of inventory available of existing homes, however strong job growth can’t be ignored as a factor helping to drive home prices higher.  The news is not all positive as affordability is a major concern, mortgage rates are nearing a four year high and the rise in prices has made it more expensive to own a home.  As such National Association of Realtors data released last week showed that first time home buyers only represented 29% of sales in the prior month, down from 32% of sales at the same time a year earlier.

Markets Continue to Turn

Yesterday’s optimism on trade is all but memory as a report surfaced that the Trump administration is considering use of an emergency law to prevent acquisitions of sensitive technology through Chinese investment.  Tech companies promptly led the market lower with all three major indices closing the session lower: the DJIA down (1.4%), the S&P down (1.7%) and the Nasdaq down (2.8%).   Facebook’s trouble continues as more and more arms of the government seek answers on privacy.  Treasuries rallied in a flight to quality up 3-8 basis points across the curve with the curve flattening further.  Currently, the 10yr US Swap Rate is only 25 basis points higher than 2yr US Swap Rate. This move took into account Consumer Confidence failing to meet expectations, coming in at 127.7 vs 131.0 expected.  The Dollar was up on the day erasing yesterday’s losses: up against the Dollar Spot Index (0.3%),  up against the EUR (0.4%) and up against the GBP (0.5%).

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