Interest rates rose after the release of strong US economic data. The 10-year Treasury yield moved up to 3.15% and gave the willies to investors who initially pushed the Dow up triple digits but then took some money off the table. At the close the Dow was up 54 at 26,828 on heavier volume. Banks and energy stocks were the leaders.
Oil prices hit a 4-year high and gurus are thinking it will go higher as sanctions against Iran loom larger than a full moon. This price jump came despite a bigger than expected US crude oil stockpile increase of 8 million barrels and reports that both Saudi Arabia and Russia are also increasing output. November 4th is the date on which sanctions could snap back into place against Iran and the feeling seems to be that oil prices will exhibit upward bias until then. Meanwhile Exxon Mobile is pumping billions into expanding its largest refinery in Asia ahead of the 2020 implementation of new pollution rules mandating that sulfur emissions for ocean going ships decline from 3.5% to 0.5%. These rules could shift 4 million barrels per day demand from dirty bunker fuel to cleaner refined fuels. WTI crude closed the day up 1.5% to $76.36 per barrel.
Random Lengths is reporting that lumber prices have fallen below prices that existed last year at this time. Back in June, prices spiked to an all time high but have now given all that back. The framing lumber index has now fallen $137 per MBF to $403. Last year it was $435. Corelogic reports that home prices across the country are up 5.5% from last year but this price growth rate has declined from the 7% level. The housing market has slowed a bit but remains in good shape given the strong job market and rising wages. The reason behind the recent lumber price decline is related to slowing growth rates in construction, new mills coming online and an easing of trade tensions with Canada. Random Lengths noted that with prices down, volumes are picking up as buyers take advantage of the lower prices to restock inventory.
The Boy Scouts are prepping for our annual Christmas Tree sale and this year looks like a tight one from a supply standpoint. The growers are not offering any new inventory and one grower is cutting back what he can give us due to big buyers from the Middle East wanting fresh NW Christmas trees and willing to pay top dollar. Go figure!