Dow fell 23, decliners over advancers 5-4 & NAZ fell 24, dragged own by Apple (AAPL). The Financial Index was up a fraction in the 213s. The MLP index in the 404s & the REIT index at 267 are up slightly, junk bond funds are mixed & Treasuries rose for a 6th day as
European leaders clashed on ways to curb the region’s debt
crisis. Oil dropped for the 5th time in 6 days on discord over Europe's debt crisis & weaker-than-
expected German business sentiment. Gold was a tad lower.
Photo: Bloomberg
Investors in the US are buying Treasuries at a faster pace than foreigners for the first time since 2010, aiding the gov in its efforts to borrow as total public debt outstanding rises above $16T. Gov debt held by domestic buyers, excluding the Federal Reserve (FED), rose 10.7% in the first 7 months of this year to $3.6T, compared with a 6.9% increase for countries from China to Germany, according to the Treasury Dept. Foreign purchases grew 13% last year, while US holdings fell 4.6%. Record-low yields are proving no deterrent to US buyers concerned that unprecedented stimulus by the FED & Ben Bernanke may neither stimulate the economy nor bring down a jobless rate that has exceeded 8% since Feb 2009. The gov is dependent on demand for its debt as it seeks to finance a budget deficit which will exceed $1T for the 4th straight year. While investors outside the US own 50.4% of Treasuries, up from 49% in May 2011, their share has declined from 55.7%in 2008. China, the biggest foreign owner, has cut its holdings to $1.15T from a peak of $1.31T in Jul 2011.
Fed Recovery Doubts Spur Investor Bid for Treasuries
Photo Bloomberg
German business confidence unexpectedly fell to the lowest in more than 2½ years in Sep as the sovereign debt crisis clouded the economic outlook. The Ifo institute in Munich said its business climate index dropped for a 5th straight month to 101.4 from 102.3 in Aug, the lowest reading since Feb 2010. The forecast had been for an increase to 102.5. The debt crisis has pushed at least 5 of the 17 countries using the € into recession, curbing demand for German exports. But markets have rallied since ECB President Draghi unveiled an unlimited bond-purchase plan designed to fight speculation of a currency breakup.
German Business Confidence Unexpectedly Falls Again
Photo: Bloomberg
China’s new leaders are poised to inherit the weakest economic growth in 3 decades ago & may need to borrow from his market-opening tool kit to avert a steeper decline. As the Communist Party prepares to anoint Vice President Xi Jinping & Vice Premier Li Keqiang next month as its 5th generation in charge, data from exports to production signal the gov will struggle this year to reach its 7.5% expansion target. The retiring top echelon took power in 2003 with growth above 9% & their predecessors were bequeathed a 14% pace in 1993. US & European consumer spending that fueled expansion for decades is waning, while the young labor force that filled China’s factories is starting to shrink. Unless Xi & Li can succeed where their predecessors came up short & curb state enterprises, boost access to credit for private companies & raise consumption, annual growth could slump to 4% by 2014. China’s slowdown is adding to headwinds complicating the global economy’s struggle with Europe’s debt crisis & stunted US job gains. China’s economy, the world’s 2nd-largest, accounted for 36% of expansion last year.
Markets are only drifting lower. AAPL had less than stellar new iPhone sales & the stock is being sold. More importantly, news from China & Germany is not encouraging while the US economy is merely plodding along as Q3 winds down.. However, the Dow remains near its highest levels in 4 years, 13.6K, where it was all last week. I think this caution comes from a sense that Q3 earnings will disappoint.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.096% | |
U.S. 2-year |
0.258% | |
U.S. 10-year |
1.708% |
| CLX12.NYM | ...Crude Oil Nov 12 | ...91.84 | ... 1.05 | (1.1%) |
| GCU12.CMX | ...Gold Sep 12 | ......1,773.00 | ... 2.50 | (0.1%) |
Get the latest daily market update below:
Investors in the US are buying Treasuries at a faster pace than foreigners for the first time since 2010, aiding the gov in its efforts to borrow as total public debt outstanding rises above $16T. Gov debt held by domestic buyers, excluding the Federal Reserve (FED), rose 10.7% in the first 7 months of this year to $3.6T, compared with a 6.9% increase for countries from China to Germany, according to the Treasury Dept. Foreign purchases grew 13% last year, while US holdings fell 4.6%. Record-low yields are proving no deterrent to US buyers concerned that unprecedented stimulus by the FED & Ben Bernanke may neither stimulate the economy nor bring down a jobless rate that has exceeded 8% since Feb 2009. The gov is dependent on demand for its debt as it seeks to finance a budget deficit which will exceed $1T for the 4th straight year. While investors outside the US own 50.4% of Treasuries, up from 49% in May 2011, their share has declined from 55.7%in 2008. China, the biggest foreign owner, has cut its holdings to $1.15T from a peak of $1.31T in Jul 2011.
Fed Recovery Doubts Spur Investor Bid for Treasuries
German business confidence unexpectedly fell to the lowest in more than 2½ years in Sep as the sovereign debt crisis clouded the economic outlook. The Ifo institute in Munich said its business climate index dropped for a 5th straight month to 101.4 from 102.3 in Aug, the lowest reading since Feb 2010. The forecast had been for an increase to 102.5. The debt crisis has pushed at least 5 of the 17 countries using the € into recession, curbing demand for German exports. But markets have rallied since ECB President Draghi unveiled an unlimited bond-purchase plan designed to fight speculation of a currency breakup.
German Business Confidence Unexpectedly Falls Again
China’s new leaders are poised to inherit the weakest economic growth in 3 decades ago & may need to borrow from his market-opening tool kit to avert a steeper decline. As the Communist Party prepares to anoint Vice President Xi Jinping & Vice Premier Li Keqiang next month as its 5th generation in charge, data from exports to production signal the gov will struggle this year to reach its 7.5% expansion target. The retiring top echelon took power in 2003 with growth above 9% & their predecessors were bequeathed a 14% pace in 1993. US & European consumer spending that fueled expansion for decades is waning, while the young labor force that filled China’s factories is starting to shrink. Unless Xi & Li can succeed where their predecessors came up short & curb state enterprises, boost access to credit for private companies & raise consumption, annual growth could slump to 4% by 2014. China’s slowdown is adding to headwinds complicating the global economy’s struggle with Europe’s debt crisis & stunted US job gains. China’s economy, the world’s 2nd-largest, accounted for 36% of expansion last year.
Markets are only drifting lower. AAPL had less than stellar new iPhone sales & the stock is being sold. More importantly, news from China & Germany is not encouraging while the US economy is merely plodding along as Q3 winds down.. However, the Dow remains near its highest levels in 4 years, 13.6K, where it was all last week. I think this caution comes from a sense that Q3 earnings will disappoint.
Dow Jones Industrials
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