Dow climbed 88, advancers over decliners 3-2 & NAZ went up 5. The MLP index rose 4+ to the 456s & the REIT index inched up fractionally in the 278s. Junk bond funds were a little higher while Treasuries had a big rally, taking the yield on the 10 year Treasury down 7 basis points. Oil was flattish & gold finally had a rebound rally, still is mired in the 1200s.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Big Ben has a choice: Sacrifice stimulus by trimming bond purchases or risk market distortion by further expanding the $3.5T balance sheet. Last week’s payrolls report gives him cover to cut. Although it doesn’t make the decision any easier: Economic growth & inflation remain short of the expectations, which might argue for keeping up bond purchases at an $85B-a-month clip. On the other hand, dialing back QE would signal investors that they don’t need to reach for yield by piling into risky securities. In a Jun 19 press conference following 2 days of meetings by the FOMC, Bernanke said the central bank may start scaling back its bond-buying program this year & end it in mid-2014 if the economy achieves growth objectives. Fed Governor Jeremy Stein, who has backed record stimulus, went a step further in a speech last week by signaling the central bank could start reducing purchases as early as Sep. He suggested enough progress has already been made to justify tapering QE by then. Rather than putting too much emphasis on the most recent economic data to determine when to cut back, officials should instead evaluate the cumulative evidence of improving economic fundamentals since the program began last Sep, he said. That's all part of keep 'em guessing.
Fed Taper Would Swap Stimulus for U.S. Market Stability: Economy
US consumer borrowing climbed in May by the most in a year as Americans put more purchases on their credit cards & took out more school & auto loans. The $19.6B increase in credit followed a revised $10.9B gain the previous month that was less than initially reported, according to the Federal Reserve. The forecast called for a $12.5B advance. A boost to household wealth from recovering property values & higher stock prices is putting Americans in a position to capitalize on lower interest rates & purchase costlier items, such as cars. Confidence to borrow is also being punctuated by faster job & income growth that will help sustain the consumer spending that accounts for about 70% of the economy. Non-revolving debt, such as that for college tuition & the purchase of vehicles & mobile homes, increased $13B after rising $10.1B a month earlier. Lending to consumers by the federal gov (mainly for student loans), rose $3.8B before seasonal variations.
Consumer Borrowing in U.S. Climbs $19.6 Billion
Greek Finance Minister Yannis Stournaras
Photo: Yahoo
Greece approved to get next rescue loan payments Associated Press
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.04% | |
U.S. 2-year |
0.36% | |
U.S. 10-year |
2.64% |
| CLQ13.NYM | ...Crude Oil Aug 13 | ...103.08 |  ...0.14 | (0.1%) |
Big Ben has a choice: Sacrifice stimulus by trimming bond purchases or risk market distortion by further expanding the $3.5T balance sheet. Last week’s payrolls report gives him cover to cut. Although it doesn’t make the decision any easier: Economic growth & inflation remain short of the expectations, which might argue for keeping up bond purchases at an $85B-a-month clip. On the other hand, dialing back QE would signal investors that they don’t need to reach for yield by piling into risky securities. In a Jun 19 press conference following 2 days of meetings by the FOMC, Bernanke said the central bank may start scaling back its bond-buying program this year & end it in mid-2014 if the economy achieves growth objectives. Fed Governor Jeremy Stein, who has backed record stimulus, went a step further in a speech last week by signaling the central bank could start reducing purchases as early as Sep. He suggested enough progress has already been made to justify tapering QE by then. Rather than putting too much emphasis on the most recent economic data to determine when to cut back, officials should instead evaluate the cumulative evidence of improving economic fundamentals since the program began last Sep, he said. That's all part of keep 'em guessing.
Fed Taper Would Swap Stimulus for U.S. Market Stability: Economy
US consumer borrowing climbed in May by the most in a year as Americans put more purchases on their credit cards & took out more school & auto loans. The $19.6B increase in credit followed a revised $10.9B gain the previous month that was less than initially reported, according to the Federal Reserve. The forecast called for a $12.5B advance. A boost to household wealth from recovering property values & higher stock prices is putting Americans in a position to capitalize on lower interest rates & purchase costlier items, such as cars. Confidence to borrow is also being punctuated by faster job & income growth that will help sustain the consumer spending that accounts for about 70% of the economy. Non-revolving debt, such as that for college tuition & the purchase of vehicles & mobile homes, increased $13B after rising $10.1B a month earlier. Lending to consumers by the federal gov (mainly for student loans), rose $3.8B before seasonal variations.
Consumer Borrowing in U.S. Climbs $19.6 Billion
Greek Finance Minister Yannis Stournaras
Photo: Yahoo
Greece passed another hurdle in
its bailout program, securing installments of the rescue package
that is keeping the country afloat. The creditors approved the release of €6.8B ($8.7B) in funds over the next few months, provided the country sticks
to the agenda of cuts & reforms it agreed in return for the bailout
loans, including laying off several thousand civil servants. The ECB, the EU & the IMF
said that the country's reform program, implemented in exchange
for rescue loans, is largely on track, although it's moving too slowly.
They also warned that the country's economic outlook remains uncertain. But they still recommended that the next loan payments be made, &
the finance ministers from the 17 countries in eurozone agreed.
Belgian Finance Minister Koen Geens said the loans would be divided into 3 groups & disbursed in Jul, Aug & Oct. "Greece is getting on track," German Finance Minister Wolfgang
Schaeuble said. "It is not easy for
them." However, the lending group added that "the outlook remains uncertain." It said "policy
implementation is behind in some areas" & that the Greek authorities
have said they will do more to ensure delivery of the fiscal targets for
2013-14, noting in particular efforts to restrict overspending in the
health sector. "In short, it is time to step up
the momentum of reform in Greece, support the return of confidence for
the sake of sustainable growth and job creation," said the EU's monetary
affairs commissioner, Olli Rehn.
Greece approved to get next rescue loan payments Associated Press
The rally was less impressive that the gain in the Dow might suggest. Very few stocks had significant price movements as traders brace for the earnings reports coming in the nest few weeks. Alcoa (AA) is the first & reports from the big banks shortly after. Following the recession, bank earnings have looked good. But that followed dreadful numbers during the trough & then reversals of provisions for loans which proved to be less troublesome than originally expected. Additionally, earnings have been helped by interest costs of essentially zero.
Dow Jones Industrials
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