Friday, June 14, 2013

Markets slip lower on consumer confidence data

Dow lost 105, decliners slightly ahead of advancers & NAZ fell 21.  The MLP index rebounded 2+ to the 446s & the REIT index was up 1+ to the 282s.  Junk bond funds were 1-2% higher (a big move) & AM gains were reduced for Treasuries in the PM.  Oil struck a 9 month high after news that the US had authorized sending weapons to Syrian rebels sparked concerns about Middle East supplies.  Gold found buyers, but is still trying to get above $1400.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLN13.NYM...Crude Oil Jul 13....97.78 Up ...1.09 (1.1%)

Live 24 hours gold chart [Kitco Inc.]

Fed Chairman Ben S. Bernanke

Photo:   Bloomberg

The IMF urged the US to repeal sweeping gov spending cuts & recommended that the Federal Reserve (FED) continue a bond-buying program through at least the end of the year.  In its annual check of the health of the US economy, the IMF forecast economic growth would be a sluggish 1.9% this year & it estimates growth would be as much as 1.75 percentage points higher if not for a rush to cut the gov budget deficit.  The IMF cut its outlook for economic growth in 2014 to 2.7%, below its 3% forecast published in Apr.  The Fund said in Apr it still assumed the deep gov spending cuts would be repealed, but it had now dropped that assumption.  The IMF said the US should reverse the spending cuts & instead adopt a plan to slow the growth in spending on gov-funded health care & pensions (entitlements).  The Fund would also like the US to collect more in taxes.  The Fund recommended that the  FED keep up its massive asset purchases at least thru the end of the year to support the recovery, but should also prepare for a pull-back in the future.  The IMF said unwinding the easy-money policies would likely present challenges, & it was key for the FED to communicate effectively with markets.  It also said the long period of low interest rates could have unintended consequences in the future, sowing the seeds of future financial vulnerabilities.

IMF Sees Fed QE Through 2013, Warns of Exit Plan Challenges

Americans are more confident in US banks than they’ve been in 5 years as an improving economy helps lenders boost profit & repair their balance sheets, according to a new Gallup survey.  People who said they have “a great deal” or “quite a lot” of confidence in US lenders climbed to 26% from a record low of 21% a year ago, but that’s still below the 41% recorded in 2007 before the credit crisis & 32% in 2008 as the financial system began to falter.  “Most authorities agree that U.S. banks did well on their ‘stress tests’ and that banks’ balance sheets are much improved, as are their earnings,” Gallup said.  The percentage expressing confidence in banks is now almost equal to those with little or no confidence, which Gallup said fell to 28% from 35% a year earlier.  Confidence in banks ranked 10th among 16 types of institutions.  While lenders trailed the military, small business & the police, they were ahead of television news, newspapers & Congress.  Confidence in banks also rose the fastest of any group this year.

Confidence in U.S. Banks Climbs to 5-Year High: Gallup

Foreign demand for US Treasury securities fell in Apr for the first time in more than a year, as China & Japan both trimmed their holdings.  The Treasury said that total foreign holdings dropped 1.2% in Apr from Mar to $5.67T.  China, the largest foreign buyer of Treasury debt, reduced its holdings 0.4% to $1.26T.  Japan, the 2nd-largest buyer, cut its holdings 1.2% to $1.1T.  Even with the reductions, Treasury debt held by foreigners is up 8.6% from a year ago, showing overseas investors are still buying US debt despite sharp debates in Congress over reducing federal deficits.

Foreign holdings of US Treasury debt drop in April AP

This was another peaceful day in the markets.  Stocks slipped lower, largely because the bulls took off early to enjoy long weekends.  Jun 18-19 is the next meeting by the FOMC & all traders will be watching.  For what it's worth, there was selling in the PM. 

Dow Jones Industrials

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