DAILY MARKET NEWS - 10-08-2023

Ariff Azraei

The US rental scene continues to see soaring vacancies and falling rents, while home prices remain on a plateau. Vacancy rates have climbed to 6.3%, the highest in two years, and median asking rents stalled in July, extending the cooling growth trend. Though still sky-high compared to 2019, rents have eased off their July 2022 peak as job openings and suburban options grow. On the housing side, after hitting dizzying new records, median home prices have dipped 0.2% since April and have started a gradual descent. While major drops aren't expected soon, experts say home values have begun slowly unwinding from their astronomical heights, while major lenders are having a hard time selling off loans backed by commercial real estate as the market grows wary of sectors like offices, hotels, and apartments.


Wall Street slumped Wednesday as investors geared up for Thursday’s inflation data, which could spur another round of Fed rate hikes. Rate-wary tech stocks spearheaded the sell-off, while the energy sector rallied to near six-month highs on surging oil prices. Swelling credit card balances touched $1 trillion recently, and signs of consumer weakness clouded the outlook, in addition to the resumption of student loan repayment, which could be a trigger for a recession.


Gold prices declined for the third day in a row on Wednesday, dropping to the lowest level in nearly two weeks, as investors awaited the release of the July US consumer price inflation report and data from China showed deflation has re-emerged. Price action suggests a slight recovery before the price continues its downtrend.


Despite the U.S. Energy Information Administration reporting domestic oil production reaching a 3-year high in early August, crude oil prices climbed to 9-month highs as bullish traders focused on Saudi Arabia's pledge to cut output rather than rising U.S. crude inventories that signalled falling demand. The diverging data highlights uncertainty around supply and demand dynamics, putting speculators in power.


The U.S. dollar drifted lower on Wednesday ahead of inflation data but overall consolidated. The Chinese yuan rose slightly despite an executive order signed by President Biden prohibiting some U.S. investment in China, while data showed the Chinese economy slipped into deflation, raising the chances of stimulus. The dollar rose against the yen as the yield spread between the U.S. and Japan held steady.

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