Monday, June 2, 2014

Markets slide lower on mixed economic data

Dow lost 20, decliners over advancers almost 2-1 & NAZ fell 24.  The MLP index was up pennies to a new record in the 495s & the REIT index slipped a fraction to take it below 301.  Junk bond funds were mixed & Treasuries edged lower.  Oil & gold did little.

AMJ (Alerian MLP Index tracking fund)

US Treasury Bonds Rates
Maturity Yield Yesterday Last Week Last Month
3 Month 0.03 0.02 0.01 0.01
6 Month 0.04 0.04 0.04 0.03
2 Year 0.34 0.34 0.34 0.42
3 Year 0.78 0.77 0.77 0.86
5 Year 1.52 1.52 1.53 1.66
10 Year 2.49 2.48 2.53 2.58
30 Year 3.34 3.33 3.40 3.36

CLN14.NYM....Crude Oil Jul 14...102.45 Down ...0.26  (0.3%)

GCM14.CMX...Gold Jun 14......1,246.10 Up ...0.50 (0.0%)

The Institute for Supply Management’s factory index fell to 53.2 in May from 54.9 in the prior month, reported today.  Readings above 50 indicate expansion.  The forecast called for 55.5, with estimates ranging from 54 to 57.  Other factory reports from around the world were mixed.  Manufacturing in the euro area grew at a slower pace amid weakness in France.  A Purchasing Managers’ Index fell to a 6-month low of 52.2 in May from 53.4, according to Markit Economics.  But manufacturing in China went up in May at the fastest pace in 5 months. The Purchasing Managers’ Index rose to 50.8 in May, the National Bureau of Statistics & China Federation of Logistics & Purchasing said yesterday.

U.S. ISM Manufacturing Index Falls to 53.2 in May From 54.9

But another report differs. The Markit Economics final index of US manufacturing increased in May to a 3-month high of 56.4 from 55.4 a month earlier as production picked up.  A reading above 50 for the purchasing managers’ measure indicates expansion.  The forecast was for the gauge to hold at its preliminary reading of 56.2.  Estimates ranged from 55.2 to 56.5.  “The survey puts the sector on course to provide a substantial boost to gross domestic product in the second quarter, and therefore adds to signs that the economy Has enjoyed a strong revival after shrinking due to the adverse weather at the start of the year,”  Chris Williamson, chief economist at Markit, said.  “Companies are reporting that their customers are feeling more confident, restocking, expanding and investing.”  The gauge of production rose to 59.6 , the highest since Feb 2011, from 58.2 a month earlier.  Orders & factory employment were little changed from Apr.  The Markit measure is based on replies from about 85-90% of companies in a poll of more than 600 American manufacturers.

Markit Final May Index of Manufacturing in U.S. Rises to 56.4

OAO Gazprom, Russia’s natural-gas exporter, extended the deadline for Ukraine to pay before facing a supply cut by a week as the EU hosts talks to resolve the dispute & avert disruptions.  Ukraine may avoid a move to advance payments & win a lower price by settling its gas debt by Jun 9, Gazprom CEO Alexey Miller said in a statement.  The company today received $786M for Feb & Mar, saying Ukraine still owes at least $1.45B for the last 2 months of 2013, due by the new deadline.  Russia & the EU are resuming gas talks with Ukraine today, as a week of intl engagement on the crisis in the former Soviet republic starts & pres Putin prepares to visit France for D-Day events.  Ukraine depends on Gazprom for half of its gas & carries 15% of Europes's annual demand thru its pipelines.  “We welcome that Ukraine is starting to pay down its debt,” Miller said.  Gazprom sent state energy company NAK Naftogaz Ukrainy a bill for an estimated $1.7B for this month’s gas on May 13, saying it would receive only what it paid for as of today.  Miller last month said Ukraine had run up $5.2B in debt for prior supplies.  Tensions have been easing in this critical area during the last week.

Russia Eases Ukraine Gas Demands as Three-Way Talks Resume

Stocks aren't doing much today, although the bias is on the selling side.  Maybe some of the rich traders haven't come back from their weekend holidays.  A new month brings a bunch of reports on economic activity in May, highlighted by the jobs report on Fri.  Expectations are for another strong report, showing 200K jobs were added in May.  Dow remains inches from setting another record high & the bulls will try to make that happen.

Dow Jones Industrials

No comments: