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Markets Effort to Rebound Come Up Mixed

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Market participants looking for a quick rebound in today’s regular trading session will have to wait another day. Actually, for a while it appeared as if a big windfall pushback on the harsh selling we saw over the past three trading days was setting in — the Dow was +506 points at its intraday high, the Nasdaq +2.8% — but we wound up mixed overall: the Dow slid -85.5 points or -0.27%, the S&P 500 wound up on the other side of the ledger, +0.27% to close at 4000 even, the Nasdaq gained nearly a full percentage point, +114, while the small-cap Russell 2000 was -0.31% on the day.

Both WTI and Brent crude oil prices dropped another -3% on the day, although crypto saw a reversal of fortune today: Bitcoin rose +3.69% while Ethereum grew +4.56% Tuesday. Even though crude oil prices are down more than -10% over just the last two sessions, it’s tough to believe a real pullback on the commodity is in the near-term cards, with Russia continuing to wage its war of aggression in Ukraine with no end in sight, and the West continuing to embargo Russian oil and gas from its most lucrative markets.

Today, the Q1 Household Debt survey from the Federal Reserve came out, demonstrating a +1.7% increase — $266 billion — to $15.84 trillion. This is $1.7 trillion higher than at the end of 2019, the last comparable period. Credit card debt decreased -$15 billion, though are still +$71 billion higher than the same quarter a year ago.

Mortgage rates, however, rose $250 billion to $11.18 trillion in the quarter, while Auto loans rose +$11 billion and Student loans another +$14 billion. In all, new non-housing debt grew by +$17 billion in Q1. However, both mortgage and auto loans are down from 2021 — although last year was an historically high period for loan originations.

Meanwhile, delinquencies on loan payments were modest — just 0.5% of all mortgage holders were past due 90 days or more, an historic low. So even though the gross numbers of household debt keep notching higher, the quality of debt has notably improved. This is not considered a major metric in determining inflation and economic precariousness, but it does provide an illustration of the undergirding of the debt quality of the American public.

That big report comes tomorrow in the Consumer Price Index (CPI), which is due out an hour before the opening bell. Often it’s the CPI which is cited as the actual measure of economic inflation, even though it is really just one of several metrics. That said, we look to come down from a huge +8.6% read in March. The question is: how much lower? Signs of inflation are still everywhere, and are unlikely to move meaningfully downward until the Fed’s latest quantitative tightening measures — with more to come — have demonstrated a true impact.

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