Oil prices bounced more than 10% within a three day period and are now trading at $61.70 per barrel. This record increase comes as many economic indicators suggest a near-term change in monetary policy might be looming. Markets were pricing in a high probability of interest rate cuts today and in the coming weeks. The unemployment rate is at those historic lows of 4.3%, but the 10-year Treasury yield has been hovering around 4% without budging up or down much lately. By comparison, the 30-year yield has hit a ceiling of 4.59%.
As the recovery continues and the financial terrain shifts, so too have mortgage rates, which have experienced a significant drop. Right now, mortgage rates sit at 6.17% for those with a FICO score over 740. This marks a significant decline of 23% since rates hit their recent high of 8% on October 19, 2023. Lowering mortgage rates could provide an added incentive for prospective homebuyers to purchase a home, stimulating additional housing activity.
The Organization of the Petroleum Exporting Countries (OPEC) stands ready to increase oil output. Well, they’ll do this if we allow demand for oil to increase. All eyes are on the September Consumer Price Index (CPI) report as analysts look for signs of inflation creeping back into the economy. They’re looking for it to show a 0.4% month-over-month increase and a 3.1% year-over-year increase. Such disaggregation of these figures may affect how the Federal Reserve approaches interest rate hikes.
That’s what market expectations currently point to, with the implied odds at a robust 98% for a 25 basis point interest rate cut next week. Furthermore, there’s a 90% probability of a second cut in December. In fact, speculation over these cuts has driven bullish sentiment in U.S. futures. As a result, Dow Jones Industrial Average index rose 50 points, S&P 500 surged 20 points, Nasdaq Vault 125 points and the Russell 2000 index rose by 9 points.
In other rare earth material market moves, the REMX ETF, which tracks companies that produce, refine and recycle rare earth materials, was up 2.2%. Gold prices are down, having lost $70 to close at $4,075 per ounce.
Intel Corporation (NASDAQ: INTC ) is ripping in the pre-market this morning. The firm’s shares soared 9% after the company posted robust third-quarter results. This strong financial performance is a testament to investor confidence in the company’s direction and ability to maneuver in a highly competitive market environment.