Coffee With Greta: Stocks Are Still Sliding
DJIA Futures: +6 (+0.02%)
SPX Futures: -7 (-0.2%)
NASDAQ Futures: -46 (-0.4%)
Good morning friends!
Futures are mostly lower as Wall Street continues to struggle and traders digest new data on the housing market.
Let’s get right to it!
New Home Construction Slows
New home construction slowed less than expected in November.
The Census Bureau reported housing starts dropped 0.5% last month to a seasonally adjusted annual rate of 1.43 million units.
That was better than expectations for 1.40 million but marked the third straight monthly declines.
Starts were down 16.4% year over year as high mortgage rates put pressure on builders.
Single-family starts dropped 4.1% to an SAAR of 828,000 units while multi-family starts jumped 4.8% to an SAAR of 584,000 units.
But building is expected to slow further as permits tumbled last month.
Permits dropped 11.2% to an SAAR of 1.34 million units, sharply lower than 1.48 million expected.
Bank of Japan Shifts Bond Yield Policy
The Bank of Japan shocked global markets overnight by unexpectedly widening its target range for 10-year Japanese government bond yields.
The central bank will now allow the 10-year yield on the Japanese Government Bond to move 50 basis points on either side of its 0% target.
That’s up from 25 basis points previously.
The BOJ says the move intended to “improve market functioning and encourage a smoother formation of the entire yield curve, while maintaining accommodative financial conditions.”
The bank is also maintaining loose monetary policy, leaving its benchmark interest rate unchangedat -0.1% and vowing to increase the rate of its 10-year government bond purchases.
The move caused a sell-off in bonds and stocks globally overnight.
In the U.S., the 10-year yield is up 8 basis points to 3.66%.
Yields move inversely to prices, rising as bonds are sold.
General Mills Slips Despite Earnings Beat, Strong Outlook
General Mills (GIS) shares are falling 3.5% ahead of the open despite beating fiscal Q2 expectations and hiking its outlook.
Here’s how the company’s results compared to analysts’ expectations:
- Adjusted EPS: $1.10 vs $1.07 expected
- Revenue: $5.22 billion vs $5.19 billion expected
General Mills hiked its outlook for 2023 adjusted EPS growth to between 4% to 6% vs up to 5% previously.
Organic net sales are also expected to rise 8% to 9% vs 6% to 7% growth expected previously.
But the company also warned it continues to expect ““the inflationary cost environment and the frequency and severity of disruptions in the supply chain” to be its largest challenge.
Oil Prices Rise, Surging Covid Cases In China Limit Gains
Oil prices are higher this morning as the dollar weakens and the U.S. prepares to restock its petroleum reserves.
West Texas Intermediate crude futures are up 1% to $76 bbl while Brent crude futures are up 0.9% to $80.50 bbl.
But the market is concerned about the demand impacts of the latest Covid surge in China.
Although the country has been relaxing restrictions, uncertainty remains about how China’s decision to ditch its “zero-Covid” policies will impact other countries.
In Case You Missed It
- Homebuilder sentiment dropped for the 12th straight month on Monday. The National Association of Homebuilders sentiment index fell 2 points this month to 31. That was the lowest reading since mid-2012 and worse than expectations for a slight improvement to 34. Any reading below 50 is considered negative but it was the smallest drop in the past six months. NAHB’s chief economist said that indicates builder sentiment is nearing a bottom. The 6-month sales expectations index also rose by 4 points to 35.