While not an impressive rally, the major equity indices are holding onto positive gains after giving up ground during the last hour of trading yesterday. So far everything seems surprisingly calm in advance of the Federal Reserve Open Market Committee (FOMC) minutes for the most recent meeting, which are expected to be released at 2:00PM EST. Given March’s dismal jobs report, it is quite certain that the Fed won’t even consider raising interest rates in the first half of this year. Oil continues to be the biggest disappointment of the day as inventory levels increased for the 13^th straight week, up a very heavy 10.9 million barrels to 482.4 million barrels for another 80-year record high. We note that this giant build is the result of increasing imports combined with increasing domestic production. It also didn’t help that Saudi Arabia’s Oil Minister noted that the country is producing crude oil at a record pace of 10.3 million barrels per day, which is slightly more than the 10.2 million barrels being produced back in August 2013 for the highest record since the country started keeping record back in the early 1980s.

Domestically, there was virtually no economic data that could drive the market, although there are a few lesser-followed reports worth mentioning. Firstly, the Mortgage Bankers Association (MBA) noted that for the week ended April 3^rd there was a drop in home refinancing and a pop in home purchasing over the last week. The purchase index had been flat all year, but is now moving higher and fast as applications surged for the third week in a row, increasing by 7.0% over the prior week to the highest level since July 2013. Year-over-year, the purchasing index is up a very strong 12.0%. On the other hand, the home refinancing index fell by 3.0% in the past week although it has risen sharply over the last two years. Low interest rates were definitely a key factor which led to the pop in demand as the rate for the average 30-year mortgage for conforming loans (i.e. less than $417,000) dropped three basis points to 3.86%. This could most certainly imply that we’ll see a rise in home buying activity over the next few months.

Additionally, yesterday afternoon’s consumer credit data released by the Federal Reserve was quite mixed. Overall consumer credit increased by a rather solid-looking $15.5 billion in February, but looking closer, the data shows an unwanted $3.7-billion declined in revolving credit. This marks the fourth decline in the last 5 months for the revolving component, and reflects the reluctance of the consumer to charge purchases on a credit card. The aversion to credit-card usage might be a plus for overall consumer wealth, but given the sky-high interest rates charged by credit card companies, this is a big negative for consumer spending. On the other hand, revolving credit increased by $19.2 billion which is the strongest gain since July 2011. This component is reflective of auto loans, but also reflective of the government’s ongoing and strong acquisition rate of student loan debt. The chart below shows the changes made to consumer credit since December 2013.